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James's Wholesale is considering offering a new product. This product requires an investment of ( $ 130,000 ) in new fixed assets and ( $
James's Wholesale is considering offering a new product. This product requires an investment of \\( \\$ 130,000 \\) in new fixed assets and \\( \\$ 33,200 \\) in net working capital, all of which is recoverable at the end of the project. The fixed assets will be depreciated straight-line to zero over the 7-year life of the project. The company spent \\( \\$ 10,000 \\) to hire a consult to estimate the potential costs and revenue associated with this project. The consultant projects the product will produce annual sales of \\( \\$ 117,500 \\) with annual costs of \\( \\$ 77,600 \\). At the end of the project, the company should be able to sell the fixed assets for \\( \\$ 27,800 \\). As noted earlier, the company's tax rate is 21 percent. What is the project's operating cash flow? OCF \\( = \\) Allowed attempts: 3 Identify the cash flows at the start and end of the project. \\[ C F_{0}=\\mathrm{S} \\] Allowed attempts: 3 \\[ C F_{7}= \\] Allowed attempts: 3 What is the project's net present value? (Round the WACC to two decimal places before using, i.e. \XX.XX ) NPV = Allowed attempts: 3 James's Wholesale is considering offering a new product. This product requires an investment of \\( \\$ 130,000 \\) in new fixed assets and \\( \\$ 33,200 \\) in net working capital, all of which is recoverable at the end of the project. The fixed assets will be depreciated straight-line to zero over the 7-year life of the project. The company spent \\( \\$ 10,000 \\) to hire a consult to estimate the potential costs and revenue associated with this project. The consultant projects the product will produce annual sales of \\( \\$ 117,500 \\) with annual costs of \\( \\$ 77,600 \\). At the end of the project, the company should be able to sell the fixed assets for \\( \\$ 27,800 \\). As noted earlier, the company's tax rate is 21 percent. What is the project's operating cash flow? OCF \\( = \\) Allowed attempts: 3 Identify the cash flows at the start and end of the project. \\[ C F_{0}=\\mathrm{S} \\] Allowed attempts: 3 \\[ C F_{7}= \\] Allowed attempts: 3 What is the project's net present value? (Round the WACC to two decimal places before using, i.e. \XX.XX ) NPV = Allowed attempts: 3
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