Question
Use the following information for the next 3 questions. Fiduciary Responsible Tees Corp. is considering launching a new clothing line. The project would require a
Use the following information for the next 3 questions. Fiduciary Responsible Tees Corp. is considering launching a new clothing line. The project would require a $18,000,000 capital investment and will be depreciated (straight-line to zero) over its 4-year life. The company discovers at the end of the project that it will be able to sell the equipment for $5,250,000 (salvage value). Incremental sales are expected to be $12,500,000 annually for the 4-year period with costs (excluding depreciation) of 60% of sales. The project would also require the company to increase inventory levels by $1,380,000. The company has a 21% tax rate.
What is the project cash flow (cash flow from assets) for Year 0?
Group of answer choices
-$18,000,000
-$14,880,000
-$13,500,000
-$16,620,000
-$19,380,000
What is the project cash flow (cash flow from assets) for Year 2?
Group of answer choices
$4,895,000
-$1,125,000
$3,375,000
$2,666,250
$7,166,250
What is the project cash flow (cash flow from assets) for Year 4?
Group of answer choices
$10,241,250
$4,991,250
$7,758,750
$6,378,750
$10,422,500
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