Kwangin, Inc. is considering an investment project which lasts for 4 years.

Explain the following:

a) It will be using a piece of land already in its possession.

Currently its market value is $600.

How should this be handled in your estimation of NPV of the project?

b) Each year the project will generate $1,000 of EBIT and $200 of depreciation.

The marginal tax rate is 20%, and the company pays interests of $300.

Calculate the yearly project operation cash flow.

c) Initially, it purchases a machine costing $500. At the end of the project,

it's accounting value will be $100 and market value $200.

What is the salvage value of the machine?

d) The initial net working capital will be $50.

Afterwards, the yearly NWC will be $60, $80, $70, for the first three years.

How much should the NWC be for the final year?