Question
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.1 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 $3.1 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $243,600 after 3 years. The project requires an initial investment in net working capital of $348,000. The project is estimated to generate $2,784,000 in annual sales, with costs of $1,113,600. The tax rate is 33 percent and the required return on the project is 17 percent. (Do not round your intermediate calculations.)(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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