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The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here The corporate tax rate is 34 percent.
The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4 $ 40.000 Investment Sales revenue Operating costs Dopreciation Net working capital spending $ 20,500 $ 21,000 $ 21,500 $ 18,500 4,300 10,000 510 3,700 10,000 4,400 4,500 10,000 560 10,000 460 460 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 1 Year 2 Year 3 Year 4 Net income %24 b. Compute the incremental cash flows of the investment for each year (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) Year 0 Year 1 Year 2 Year 3 Year 4 Cash flow e. Suppose the appropriate discount rate is 12 peroent. What is the NPV of the projoct? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g.. 32.16)) NPV
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