Question
You are a project manager. You are estimating the cash flows of a potential project that requires an investment of $200,000, including installation cost, and
You are a project manager. You are estimating the cash flows of a potential project that requires an investment of $200,000, including installation cost, and $30,000 in working capital, which will be fully recaptured at the end of the project. The machine has an estimated life of six years and will be depreciated via the simplified straight-line method. The project is expected to raise the firms annual revenues by $330,000 and increase annual costs by $125,000. The machine you purchase for the project can be sold for $40,000 in six years. The firm has a marginal tax rate of 40%. What is the terminal value of the project?
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