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A firm is considering a project with the following information: Project will require purchase of a machine for $114,339.00 that is MACRS depreciable over a
A firm is considering a project with the following information:
- Project will require purchase of a machine for $114,339.00 that is MACRS depreciable over a five-year schedule. (no depreciation until end of year 1).
- Project will require immediate non-depreciable expenses of $25,324.00 TODAY (year 0).
- Project will have the following projected balance sheet values of NWC:
YEAR | 0 | 1 | 2 |
---|---|---|---|
NWC Level | $4,000 | 10.00% of sales | 10.00% of sales |
- Sales for the project will be $51,862.00 per year, with all other expenses (excluding depreciation) at 43.00% of sales.
- The tax rate for the firm is 39.00%, while the cost of capital is 12.00%
*assume project goes beyond two years
What is the projects cash flow for year 2?
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