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Please help me with A-E Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.426 million.
Please help me with A-E
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.426 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value (salvage value) of $499,800. The project requires an initial investment in net working capital of $714,000. The project is estimated to generate $5,712,000 in annual sales, with costs of $2,284,800. The tax rate is 35 percent and the required return on the project is 14 percent. Required: (a)What is the project's year O net cash flow (or cash flow from assets)? -7,854,000 (b)What is the project's year 1 net cash flow (or cash flow from assets)? 3,126,249 (c) What is the project's year 2 net cash flow (or cash flow from assets)? 2,828,511 (d)What is the project's year 3 net cash flow (or cash flow from assets)? (Click to select) (e)What is the NPV? (Click to select)Step by Step Solution
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