Question
The project requires an investment of $10 million in mining machinery and at the end of 5 years the machinery has no further value. Working
The project requires an investment of $10 million in mining machinery and at the end of 5 years the machinery has no further value. Working capital increases as the project gears up in the early years, but later in the projectss life, the investment in working capital is recovered. Working capital year 0, 1, 2, 3, 4 and 5: $1500000, $4075000, $4279000, $4493000, $4717000, and $3039000 subsequently. The compnay expects to sell 750,000 pounds magnoosium a year at a price of $20 a pound in year 1 and the revenue is expected to grow at 5% every year. The expenses in year 1 is $10million and is expected to increase in line with the revenue growth rate. Straight line depreciation is applied. Tax is 35%. Calculate net cash flow
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started