Question
Intel is considering making a new investment of $ 1000 in a new chip producing facility and has come with the following estimated revenues are
Intel is considering making a new investment of $ 1000 in a new chip producing facility and has come with the following estimated revenues are 1850 , operating expenses 700, depreciation $250 per year. The project will end after four years, the marginal tax rate is 40% and the cost of capital for Intel is 0.08.
Estimate the initial investment.
Answer for part 1 Estimate the annual after-tax cash flow to the firm to Intel on this investment. (You have to do it only once, since the cash flows are the same every year)
Answer for part 2 Estimate the net present value of this project.
Answer for part 3 Now assume that this project will require Intel to maintain working capital at 20% of revenues occurring at the beginning of each year and the working capital being recovered at the end. Estimate the new initial investment.
Answer for part 4 Estimate the net present value of the project with the working capital.
plz with the way of solve.
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