You are evaluating a new project for your company FINSOFT, Inc., which has developed a new financial software. As a first step, you need to complete a table indicating the corresponding inflows and outflows at t=0 (initial cash flow), at t=1 (year 1 cash flow), at t=2 (year 2 cash flow), and at t=3 (year 3 or final cash flow). The project requires an initial investment of $210,000 in fixed assets which are to be depreciated straight-line to zero over the 3-year project life, with an estimated resale value of $ 52,500 at the end of year 3. Net Working Capital requirements at the beginning of each year equal 10% of the projected sales during the following year. Projected sales from the new software are $600,000 in year 1, $660,000 in year 2, and $720,000 in year 3. Variable costs amount to 50% of projected sales and fixed costs are $ 170,000 per year. The tax rate is 20%.

Hints:

Change in NWC at t=0 equals 10% of the projected sales at t=1. It is an outflow.

Change in Fixed Assets at t=3 equals the resale value minus the tax on the capital gain. It is an inflow.

QUESTIONS:

Question 1: Change in Fixed Assets at t = 0 (initial investment) is [ Select ] ["-$210,000", "-$270,000", "-$150,000", "-$180,000"]

Question 2: Free Cash Flow at t = 0 is [ Select ] ["-$180,000", "-$270,000", "-$60,000", "-$210,000"]

Question 3: Operating Cash Flow for Year 1 is [ Select ] ["$116,000", "$118,000", "$112,000", "$48,000"]

Question 4: Change in NWC for Year 1 is [ Select ] ["-$6,000", "-$60,000", "-$66,000", "-6,600"]

Question 5: Operating Cash Flow for Year 2 is [ Select ] ["$72,000", "$118,000", "$90,000", "$142,000"]

Question 6: Free Cash Flow for Y2 is [ Select ] ["$118,000", "$136,000", "$142,000", "$ 112,000"]

Question 7: Change in NWC for Year 3 is [ Select ] ["-$72,000", "$66,000", "$72,000", "-$60,000"]

Question 8: Free Cash Flow for Y3 is

PLEASE ANSWER ALL QUESTIONS