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A project requires an initial investment in equipment of $90,000. There is also an increase of $10,000 in working capital at the start of the

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A project requires an initial investment in equipment of $90,000. There is also an increase of $10,000 in working capital at the start of the project but will be recaptured when the project ends. The project is expected to produce sales revenues of $190,000 for each of the next three years. Variable costs are estimated to be 60% of the revenues. The equipment will be depreciated using straight line depreciation over the three years of project's life. At the end of year three, the equipment will be worthless. The corporate tax rate is 21% and the cost of capital is 12%. Blank #1: What is the net operating cash flow (OCF) for the project in Year 1? (5 points) Instruction: Round your answer to the nearest integer (i.e. no decimal). Do not include any symbol, number only. Blank #2: What is the net cash flow from project in Year 3? (5 points) Instruction: Round your answer to the nearest integer (i.e. no decimal). Do not include any symbol, number only. Blank #3: What is the modified internal rate of return (MIRR) for the project? (5 points) Instruction: Round your answer to two decimal places. MIRR should be in percentage. Do not include any symbol, number only. Blank #4: Should the firm invest in this project based on its MIRR? YES or No. (5 points) Instruction: Type YES or NO

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