Revenues generated by a new fad product are forecast as follows: Year 1 2 3 4 Thereafter Revenues $6e, eee 30,000 2e, eee 10,080 e Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 10% of revenues in the following year. The product requires an immediate investment of $54.000 in plant and equipment Required: a. What is the initial investment in the product? Remember working capital b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years c. If the opportunity cost of capital is 10%, what is the project's NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Req A Regs ReqC and D What is the initial investment in the product? Remember working capital. Initial investment REGA ReqB> Revenues generated by a new fad product are forecast as follows: Year 1 2 3 4 Thereafter Revenues $60, eee 3e, eee 2e, eee 10, eee e Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 10% of revenues in the following year. The product requires an immediate investment of $54,000 in plant and equipment. Required: a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 10%, what is the project's NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Reg A Reg B Reg Cand D If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. (Do not round intermediate calculations.) Year Cash Flow 1 2 3 4 Revenues generated by a new fad product are forecast as follows: Year 1 2 3 4 Thereafter Revenues $60, eee 3e, eee 2e, eee 1e, eee Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 10% of revenues in the following year. The product requires an immediate investment of $54,000 in plant and equipment Required: a. What is the initial Investment in the product? Remember working capital b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years, c. If the opportunity cost of capital is 10%, what is the project's NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Req A Req B Reg C and D c. If the opportunity cost of capital is 10%, what is the project's NPV? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) d. What is project IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) NPV d. IRR % ( ReqB ReuCanD
