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The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years ( years 1 , 2

The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years (years 1,2, and 3). The cane manufacturing machine will result in sales of 2,000 canes in year 1. Sales are estimated to grow by 10% per year each year through year three. The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant. Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts. It is estimated that the Sisyphean Corporation will need 2% of its annual sales in cash, 4% of its annual sales in accounts receivable, 9% of its annual sales in inventory, and 6% of its annual sales in accounts payable. Calculate the level of NWC in each of the years, 0,1,2, and 3. Please assume that the initial investment in NWC happens before year 1, that is at the end of year zero. To get the tinzing right, you may want to model four dates (end-of-year 0, end-of-year 1, end-of-year 2, and end-of-year 3). Assume that all NWC is recovered at the end of the last year. Calculate the change in NWC associated with a new project for each year.
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