Question
suppose trahan co.is considering a 3 year expansion plan in a machinery with initial investment of 4,000,000. the machinery will be depreciated using straight-line method
suppose trahan co.is considering a 3 year expansion plan in a machinery with initial investment of 4,000,000. the machinery will be depreciated using straight-line method over 3 years after which the value of asset will be 500,000. machinery is expected to generate incremental sales of 3,000,000 with operating costs of 1,400,000 in year one. sales are expected to grow at 10% for year 2 and 3, and operating profit margin is expected to remain constant. the tax rate is 35% and the required return on this project is 15%. what are year 1,2 , adn 3 project cashflows?
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