What is trhe terminal cash flow for the project ?

Use the following information to answers questions 9 to 11. (Short Answer - Chapter 6) The Down Towner is considering a project with a life.of 4 years that will require $165,000 for fixed assets. Current assets are expected to increase by $22,400 and current labilities will decrease by $20,000. The fixed assets will be depreciated stralight-line to a zero book value gver 5 years. At the end of the project, the fixed assets can be sold for $37,500 cash and current assets and liabilities will return to their original level. The project is expected to generate annual sales of $195,000 and costs (excluding depreciation) of $1 17,500. The tax rate is 24 percent and the required rate of return is 13 percent Investment in Fixed Assets = $165,000 Increase in NWC = Increase in Current Assets Decrease in Current Liabilities Increase in NWC $22,400 $20,000 Increase in NWC = $42,400 Initial Investment Investment in Fixed Assets + Increase in NWC Initial Investment = $165,000 + $42,400 Initial Investment $207,400 So, initial investment at time 0 for the project is $207,400 Investment in Fixed Assets $165,000 Useful Life 5 years Annual Depreciation Investment in Fixed Assets/ Useful Life Annual Depreciation $165,000 / 5 Annual Depreciation = $33,000 Annual Sales = $195,000 Annual Costs $117,500 Annual Operating Cash Flow (Annual Sales Annual Costs) (1 - tax) tax Annual Depreciation Annual Operating Cash Flow ($195,000 - $117,500) (1 - 0.24)+0.24 * $33,000 Annual Operating Cash Flow $77,500 * 0.76 + 0.24 $33,000 Annual Operating Cash Flow = $66,820