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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.376 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 $2.376 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 $184,800. The project requires an initial investment in net working capital of $264,000. The project is estimated to generate $2,112,000 in annual sales, with costs of $844,800. The tax rate is 30 percent and the required return on the project is 14 percent. Required: (a)What is the project's year 0 net cash flow? (b)What is the project's year 1 net cash flow? (c) What is the project's year 2 net cash flow? (d)What is the project's year 3 net cash flow? (e)What is the NPV
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