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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.7 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 $2.7 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 $210,000. The project requires an initial investment in net working capital of $300,000. The project is estimated to generate $2,400,000 in annual sales, with costs of $960,000. The tax rate is 31 percent and the required return on the project is 11 percent. Required: (a)What is the project's year 0 net cash flow (or cash flow from assets)? (Click to select) (b)What is the project's year 1 net 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) v (e)What is the NPV? (Click to select)
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