Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Economics

Authors: Zvi Bodie, Robert C Merton, David Cleeton

2nd Edition

0558785751, 9780558785758

More Books

Students also viewed these Finance questions

Question

Find the exact value of each expression. sin 285 sin 75

Answered: 1 week ago

Question

what is a peer Group? Importance?

Answered: 1 week ago