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I did not get this question correct on my first attempt. I believe a, b, and c are correct but I am not sure about
I did not get this question correct on my first attempt. I believe a, b, and c are correct but I am not sure about d and e.
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.778 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $449,400. The project requires an initial investment in net working capital of $642,000. The project is estimated to generate $5,136,000 in annual sales, with costs of $2,054,400. The tax rate is 32 percent and the required return on the project is 15 percent. Required: (a) What is the project's year 0 net cash flow? -6,420,000 (b) What is the project's year 1 net cash flow? 2.7 11,808 (c) What is the project's year 2 net cash flow? 2.7 11,808 (d) What is the project's year 3 net cash flow? 3.842.370 (e) What is the NPV? 414,462Step by Step Solution
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