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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.728 million. The fixed asset will
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.728 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 of $134,400. The project requires an initial investment in net working capital of $192,000. The project is estimated to generate $1,536,000 in annual sales, with costs of $614,400. The tax rate is 32 percent and the required return on the project is 14 percent. Required: (a)What is the project's year 0 net cash flow? (Click to select) (b)What is the project's year 1 net cash flow? (Click to select) (c) What is the project's year 2 net cash flow? (Click to select) (d)What is the project's year 3 net cash flow? (Click to select) (e) What is the NPV? (Click to select)
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a Year 0 net cash flow 1728 million 192000 192 million b Year 1 net cash flow 1536 million 614400 5...Get Instant Access to Expert-Tailored Solutions
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