1. A project requires an increase in net working capital of $225,000 at time 0 that will be recovered at the end of its 5 year life. If opportunity cost of capital is 7%, what is the effect on the NPV of the project?Enter your answer rounded to two decimal places.
2. A company will sell Gizmos to consumers at a price of $84 per unit. The variable costto produceGizmos is $44 per unit. The company expects to sell 16,000Gizmos toconsumers each year. The fixed costs incurred each year will be $130,000. There is an initial investment to produce the goods of $2,900,000 which will be depreciated straight line over the 17 year life of the investmentto a salvage value of $0. The opportunity cost of capital is 9% and the tax rate is 25%. What is operating cash flow each year?
3. Daily Enterprises is purchasing a $15,000,000 machine. The machine will depreciated using straight-line depreciation over its 9 year life and will have no salvage value. The machine will generate revenues of $6,500,000 per year along with costs of $2,500,000 per year.If Daily's marginal tax rate is 31%, what will be the cash flow in each of years one to 9 (the cash flow will be the same each year)? Enter your answer below rounded to the nearest whole number.