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1 2 Chapter 8 Making Capital Investment Decisions Last name First name 1. The Freeman Manufacturing Company is considering a new investment. Financial Projections for the investment are tabulated beow. The corporate tax rate is 37 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Please complete the shaded area. Should you take this project? Suppose the discount rate is 12 percent. Year 0 Year 1 Year 2 Year 3 Year 4 Sales $14,200 $15,900 $15,700 $12,900 Costs 2,100 2,100 2,100 2,100 Depreciation 7,750 7,750 7,750 7,750 EBT Tax Net income Operating cash flow Capital spending -31000 NWC -450 -175 -250 -275 Incremental cash flow NPV