Question
Good Product Company is considering a new investment. Financial projections for the investment are reported below. Cash flows are in $ thousands and the corporate
Good Product Company is considering a new investment. Financial projections for the investment are reported below. Cash flows are in $ thousands and the corporate tax rate is 34%. Assume all sales revenues is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year.
Year 0 Year 1 Year 2 Year 3 Year 4 Investment 10,000 - - - - Sales revenues - 7,000 7,000 7,000 7,000 Operating costs - 2,000 2,000 2,000 2,000 Depreciation - 2,500 2,500 2,500 2,500 Net Working Capital (end of year) - 250 300 200
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