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ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $ 7
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $ work cell. Further, it will cost the firm $ to get the work cell delivered and installed. The work cell will be straightline depreciated to zero with a year useful life. The project will require new employees to be trained at a cost of $ The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $ Finally, the firm will invest $ in net working capital to ensure the project has sufficient resources to be successful.
The project will generate annual sales of $ with expenses estimated at of sales. Net working capital will be held constant throughout the project. The tax rate is
The work cell is estimated to have a market value of $ at the end of the fourth year. The firm expects to reclaim of the final NWC position.
The cost of capital is
What is the terminal cash flow for the project?
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