You are considering a capital budgeting project with the following general information:

Sales = 400,000 / yearly

Operating expenses = 250,000 / yearly

Interest expense = 4,000 / yearly

Tax rate = 20%

Projects economic life cycle = 4 years

MACRS 5 year for depreciation on Equipment

Ownership year for 3 year

1 33%

2 45%

3 15%

4 7%

Ownership for 5 year

1 20%

2 32%

3 19%

4 12%

5 11%

6 6%

Equipment cost = 100,000

Shipping and installation fees for equipment = 10,000

NOWC will increase by $5,000 at T=0 and will be fully recovered at T=4

You can sell the equipment (FA) at the end of the project's economic life for $95,000

Draw the final time line to be evaluated - include all cash flows (don't have to do anything but provide the final time line

Part B:

In the previous problem, what would the ATSV be if you could only sell the FA (equipment) for $10,000 at the end of the projects economic life?