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Andronicus Corporation (AC) has the following jumbled information about an investment proposal: a. Revenues in each of years 14=$24,000 b. Year 0 initial investment =$44,000
Andronicus Corporation (AC) has the following jumbled information about an investment proposal: a. Revenues in each of years 14=$24,000 b. Year 0 initial investment =$44,000 c. Inventory level =$12,000 in year 1,$12,900 in year 2 , and $7,000 in year 3 d. Production costs =$8,200 in each of years 14 e. Salvage value =$12,400 in year 4 f. Depreciation =100% immediate bonus depreciation g. Tax rate =21% h. There is an additional 6-month lag for all cash flows after year 0 . For example, customers pay consistently with a 6-month lag, as AC does for production costs, taxes, etc. Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 10%, what is the project's NPV? Assume that, if the project generates losses, those losses can be used to offset profits for tax purposes elsewhere in the business. Note: Do not round your intermediate calculations. Round your final answer to the nearest whole dollar amount
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