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Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 13 = $25,000 Year 0 initial investment = $45,000

Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 13 = $25,000 Year 0 initial investment = $45,000 Inventory level = $12,500 in year 1, $13,500 in year 2, and $7,500 in year 3 Production costs = $8,500 in each of years 13 Salvage value = $12,500 in year 4 Depreciation = 100% immediate bonus depreciation Tax rate = 21% Customers pay with a 6-month lag Draw up a set of cash flow forecasts as in Table 6.4. If the cost of capital is 10%, what is the projects NPV? Assume that, if the project generates losses, those losses can be used to offset profits elsewhere in the business.

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