Question
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.8 million. The fixed asset falls into
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.8 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $449,400 after 3 years. The project requires an initial investment in net working capital of $642,000. The project is estimated to generate $5,136,000 in annual sales, with costs of $2,054,400. The tax rate is 30 percent and the required return on the project is 15 percent. (Do not round your intermediate calculations.) |
Required: | |
(a) | What is the project's year 0 net cash flow? |
(Click to select)-6,119,900 / -2,463,356 / -6,442,000 / -2,600,209 / -5,797,800 |
(b) | What is the project's year 1 net cash flow? |
(Click to select) 3,010,768 / 2,873,915 / 2,463,356 / 2,737,062 / 2,600,209 |
(c) | What is the project's year 2 net cash flow? |
(Click to select) 2,784,022 / 2,930,550 / 2,873,915 / 3,077,077 / 2,463,356 |
(d) | What is the project's year 3 net cash flow? |
(Click to select) 3,500,328/ 3,150,295/ 3,325,312 / 3,675,344 /2,873,915 |
(e) | What is the NPV? |
(Click to select) 478,268/ 432,719 /12,691,461 /383,750 /455,493.22 |
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