1. Bull & Bear Corp., is evaluating a new 5-year project. The equipment necessary for the project will cost $656,000 and can be sold for $115,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage for Year 1 is 20.00 percent, for Year 2 is 32.00 percent, then 19.20 percent, 11.52 percent, and 11.52 percent, and 5.76 percent in Years 3 - 6, inclusive and respectively. The company's tax rate is 20.0 percent. What is the after-tax salvage value of the equipment? Round your answer to three decimal places.
2. A 4-year project has an annual operating cash flow of $122,500. At the beginning of the project, $80,000 in net working capital is required, which will be recovered at the end of the project. The firm also spent $175,000 on equipment to start the project. This equipment will have a book value of $30,240 at the end of the project, but can be sold for $62,500 (i.e., at t=4 on your timeline). The tax rate is 28 percent. What is the Year 4 cash flow? Round answers to three decimal places.
3. Blackhawk Camping is considering a new 5-year project to produce a new tent line. The equipment necessary would cost $5 million and be depreciated using straight-line depreciation to a book value of zero at the end of the project. At the end of the project, the equipment can be sold for 18.00% of its initial cost. The company believes that it can sell 40,000 tents per year at a price of $85.50 and variable costs of $42.25 per tent. The fixed costs will be $355,000 per year. The project will require an initial investment in net working capital of $225,000 that will be recovered at the end of the project. The required rate of return is 13.15% and the tax rate is 28%. What is the NPV? Round answer to three decimal places