Question
With the following information, how do you find the Net working capital for each year 0-7 ? Complete the cash flow projections and find the
With the following information, how do you find the Net working capital for each year 0-7 ?
Complete the cash flow projections and find the NPV for this project. Initial CAPX are $20,000 and depreciated on a 10-year MACRS schedule (the percentages of initial cost allowed for depreciation under the current U.S. tax system). Net working capital required is $5,000 (just a one-time increase) over the life of the project. Incremental sales are $22,000 per year and incremental operating expenses are $18,000 per year. Assume that plant and equipment is disposed of at the end of year 7 (it has no resale value). The tax rate is 30%. Assume a WACC of 9.3%.
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