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A proposed investment has a cost of $250. It will have a life of 4 years. The cost will be depreciated straight-line to a zero
A proposed investment has a cost of $250. It will have a life of 4 years. The cost will be depreciated straight-line to a zero salvage value, and will be worth $50 at that time. Cash sales will be $230 per year and cash costs will run $120 per year. The firm will also need to invest $70 in net working capital at year 0. The appropriate discount rate is 8% (use for all flows), and the corporate tax rate is 40%. What are the cash flows in years 1, 2, 3, and 4?
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