Question
A proposed three-year project will require $627,000 for fixed assets, $196,000 for inventory, and $34,000 for accounts receivable. Accounts payable are expected to increase by
A proposed three-year project will require $627,000 for fixed assets, $196,000 for inventory, and $34,000 for accounts receivable. Accounts payable are expected to increase by $156,000. The fixed assets will be depreciated straight-line to a zero book value over five years. At the end of the project, the fixed assets can be sold for $225,000. The net working capital returns to its original level at the end of the project. The operating cash flow per year is $62,000. The tax rate is 35 percent and the discount rate is 12 percent.
What is the total cash flow in the final year of the project?
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Corporate Finance A Focused Approach
Authors: Michael C. Ehrhardt, Eugene F. Brigham
6th edition
1305637100, 978-1305637108
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