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At present, Solartech Skateboards is considering expanding its product line to include gas-powered skateboards. There would be $1 million initial expenditure associated with the purchase
At present, Solartech Skateboards is considering expanding its product line to include gas-powered skateboards. There would be $1 million initial expenditure associated with the purchase of new production equipment. After 5 years (when the project is expected to terminate), the equipment could be sold for $60,000 (estimated). Because of the number of stores that will need inventory, the working-capital requirements are the same regardless of the level of sales. This project will require a one-time initial investment of $50,000 in net working capital, and working capital will be recovered when the project is shut down. The company estimates that the skateboards will be viable for the next 5 years and would result in net cash flow from the operations of $290,000 for the first three years, and $250,000 for years 4 and 5. The cost of capital for Solartech Skateboards is 10%.
What is the NET CASH flow for year 4?
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