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Year 1 Revenue $60,000 2 45,000 3 30,000 4 10,000 Thereafter 0 Expenses are expected to be 40% of revenues, and working capital required in
Year 1 | Revenue $60,000 |
2 | 45,000 |
3 | 30,000 |
4 | 10,000 |
Thereafter | 0 |
Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate investment of $60,000 in plant and equipment. |
a. | What is the initial investment in the product? Remember working capital. |
b. | If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm |
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