Question
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.2 million. The fixed asset falls into
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.2 million. The fixed asset falls into the 3-year MACRS class and will have a market value of $403,200 after 3 years. The project requires an initial investment in net working capital of $576,000. The project is estimated to generate $4,608,000 in annual sales, with costs of $1,843,200. The tax rate is 31 percent and the required return on the project is 9 percent. what is the projects net cash flow at 0, 1, 2, 3 and what is NPV?
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