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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.4 million. The fixed asset will be
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.4 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 $420,000. The project requires an initial investment in net working capital of $600,000. The project is estimated to generate $4,800,000 in annual sales with costs of $1,920,000. The tax rate is 34 percent and the required return on the project is 9 percent Required: (a)What is the project's year Onet cash flow (or cash flow from assets)? (Click to select) (b)What is the project's year 1 nel cash flow (or cash flow from assets)? (Click to select) (c)What is the project's year 2 net cash flow (or cash flow from assets)? (Click to select) (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)
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