Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
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%. QUESTIONS: Question 1: Change in Fixed Assets at t-o (initial investment) is (Select) Question 2: Free Cash Flow at t-ois (Select] Question 3: Operating Cash Flow for Year 1 is Select Question 4: Change in NWC for Year 1 is (Select) Question 5: Operating Cash Flow for Year 2 is Select ] Question 6: Free Cash Flow for Y2 is Select Question 7: Change in NWC for Year 3 is Select] Question 8: Free Cash Flow for Y3 is (Select]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Unlocking The Door To Real Estate Success Achieving Passive Income

Authors: Benjamin Stone

1st Edition

979-8856252278

More Books

Students also viewed these Finance questions