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P10-11 Calculating Project Cash Flow from Assets Summer Tyme, Inc., is considering a new three-year expansion project that requires an Initial fixed asset investment of

P10-11 Calculating Project Cash Flow from Assets Summer Tyme, Inc., is considering a new three-year expansion project that requires an Initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight line to zero over its threeyear tax life, after which time it will have a market value of $210,000. The project requires an initial investment net working capital of $300,000 The project estimated to generate $2,650,000 in annual saleswith costs of $840,000. The tax rate is 35 percent and the required return on the project is 12 percent. The cash flow from assets in Year is $ the cash flow from assets in Year is the cash flow from assets in Year 2 is $and the cash flow from assets Year 3 is $The NPV for this project is $ ]( Do not include the dollar signs ($). Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g. 32.16))
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P10-11 Calculating Project Cash Flow from Assets (LO1] Summer Tyme, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset will be depreciated straight- line to zero over its three-year tax life, after which time it will have a market value of $210,000. The project requires an initial investment in net working capital of $300,000. The project is estimated to generate $2,650,000 in annual sales, with costs of $840,000. The tax rate is 35 percent and the required return on the project is 12 percent. The cash flow from assets in Year O is $ : the cash flow from assets in Year 1 is $ : the cash flow from assets in Year 2 is $ ; and the cash flow from assets in Year 3 is $ The NPV for this project is $ 7. (Do not include the dollar signs ($). Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) 2:30 OK ences question #7 Assume that you are looking at an investment opportunity that offers an annual operating cash flow of $40,000 per year for 4 years. The initial investment to purchase the necessary equipment is $200,000. You assume that you can sell the equipment at the end of 4 years for $70,000. Also, there is a need for an investment in net working capital of $15,000. If the required rate of return is 5%, and the tax rate is 35%, would you accept this project? W Multiple Choice Yes, because the NPV is $3,230,00 Yes, because the NPV IS $23.338.48 30 eu O Yes, because the NPV is $3.230.00 O Yes, because the NPV is $23,338.48 o Yes, because the NPV is $5,500.15 O No, because the NPV is $3,230.24 O O No, because the NPV is -$23,388.48

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