Question
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $981,615. The fixed asset will be depreciated
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $981,615. The fixed asset will be depreciated straight-line to 70,601 over its 3-year tax life, after which time it will have a market value of $124,819. The project requires an initial investment in net working capital of $65,484. The project is estimated to generate $196,974 in annual sales, with costs of $105,286. The tax rate is 0.23 and the required return on the project is 0.1. What is the operating cash flow in years 1 through 3? (Make sure you enter the number with the appropriate +/- sign)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started