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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 23 percent. Assume
The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 23 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. Investment Sales revenue Operating costs Depreciation Net working capital spending Net income Year 1 Cash flow Year O $ 27,100 340 Year 0 a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.) Year 2 Year 1 Year 3 $17,200 $ 13,700 3,300 5,000 3,600 6,775 6,775 6,775 305 190 ? Year 1 Year 2 $14,200 $ 15,800 3,300 6,775 240 Year 3 b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative amount should be indicated by a minus sign.) Year 4 Year 2 Year 4 Year 3 Year 4
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