ABC inc. considers an investment project that requires $500,000 in new equipment and $40,000 in extra NWC at the beginning of the project The NWC will need to be increase by another $5,000 at the end of year t=2 and it will remain at the $45,000 level until the project is completed. The projects will lead to an increase in operating pre-tax net revenue of $180,000 per year and will last for 4 years. At the end of the project (beginning of year t=5), the equipment can be sold for the salvage value of $200 000. The equipment belongs to the CCA class with d=30%, the corporate income tax rate is 40%, and the cost of capital is 8% Problem 1 (2 points) a) Find the combined cash flow at t=4 (including the PV at t=4 of the effect of this project on taxes from t=5 until infinity) b) Find the NPV of the project (note cash flow at t=3 is equal to $143700 so, you may use this number in your calculations) c) Find PV of the operational cash flow d) Find PV of the effect of all changes in NWC after the initial increase ABC inc. considers an investment project that requires $500,000 in new equipment and $40,000 in extra NWC at the beginning of the project The NWC will need to be increase by another $5,000 at the end of year t=2 and it will remain at the $45,000 level until the project is completed. The projects will lead to an increase in operating pre-tax net revenue of $180,000 per year and will last for 4 years. At the end of the project (beginning of year t=5), the equipment can be sold for the salvage value of $200 000. The equipment belongs to the CCA class with d=30%, the corporate income tax rate is 40%, and the cost of capital is 8% Problem 1 (2 points) a) Find the combined cash flow at t=4 (including the PV at t=4 of the effect of this project on taxes from t=5 until infinity) b) Find the NPV of the project (note cash flow at t=3 is equal to $143700 so, you may use this number in your calculations) c) Find PV of the operational cash flow d) Find PV of the effect of all changes in NWC after the initial increase