indian river citrus company (revised) Case Study

4. Fil in Xs in Table 1.427-31 (12-2). Net investment Outby = price + freight + installation + change in NWC = project NCF (net cash flow) = initial cost at year 0. Change in NWC (net working capital) = inventories. Salvage value SV (salvage value) tax (40%)+ recovery of NWC = termination CF (cash flow) + net op (operating) cash flow = project NCF in year 4 . Expected Net Cash Flow \begin{tabular}{ccc} \hline Year & Project S & Project L \\ \hline 0 & ($100,000) & ($100,000) \\ 1 & 60,000 & 33,500 \\ 2 & 60,000 & 33,500 \\ 3 & - & 33,500 \\ 4 & - & 33,500 \end{tabular} 4. Fil in Xs in Table 1.427-31 (12-2). Net investment Outby = price + freight + installation + change in NWC = project NCF (net cash flow) = initial cost at year 0. Change in NWC (net working capital) = inventories. Salvage value SV (salvage value) tax (40%)+ recovery of NWC = termination CF (cash flow) + net op (operating) cash flow = project NCF in year 4 . Expected Net Cash Flow \begin{tabular}{ccc} \hline Year & Project S & Project L \\ \hline 0 & ($100,000) & ($100,000) \\ 1 & 60,000 & 33,500 \\ 2 & 60,000 & 33,500 \\ 3 & - & 33,500 \\ 4 & - & 33,500 \end{tabular}