A new molding machine is expected to produce operating cash flows of $68,000 a year for 6 years. At the beginning of the project, inventory will decrease by $14,700, accounts receivables will increase by $5,500, and accounts payable will increase by $3,200. All net working capital will be recovered at the end of the project. The initial cost of the molding machine is $279,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project creating a $51,600 aftertax cash inflow. What is the net present value of this project given a required return of 13 percent?

$24,061.87

-$418.80

$28,336.01

$22,863.16

$7,925.54

*** I have attached an excel doc outlining my beginning calculation of depreciation costs and adding in salvage at the end. I am confused over when to add the working capital back in to the equation to calculate NPV.....

fixed cost of molding machine 279,000 inv -14700 (decrease) acct rec +5,500 acct. pa +3,200 equip depreciation 279000/6=46500/yr salvaged equipment +51,600 13% return working capital - 60000 operating cash flows depreciation salvage value recovery of working capital 1 68,000.00 -46,500.00 21,500.00 2 68000 -46500 21500 3 68000 -46500 21500 4 68000 -46500 21500 5 68000 -46500 21500 6 68000 -46500 21500 51600 6000