Question
Hollister & Hollister is considering a new project. The project will require $622,000 for new fixed assets, $238,000 for additional inventory, and $42,000 for additional
Hollister & Hollister is considering a new project. The project will require $622,000 for new fixed assets, $238,000 for additional inventory, and $42,000 for additional accounts receivable. Accounts payable are expected to increase by $175,000. The project has a 6-year life. The fixed assets are in the 5-year MACRS class. At the end of the project, the fixed assets can be sold for 20 percent of their original cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of $975,000 and costs of $540,000. The tax rate is 34 percent and the required rate of return is 14 percent. What is the total cash flow in year 6 of this project?
I don't want the answer on excel. And it should give $486,385.25
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