1. You are working on a bid for a contract. Thus far, you have determined that you will need $156,000 for fixed assets and another $32,000 for net working capital at Time 0. You have also determined that you can recover $68,400 aftertax for the combined fixed assets and net working capital at the end of the 4-year project. What operating cash flow will be required each year for the project to return 16 percent in nominal terms?

$46,666.67

$48,929.74

$55,200,16

$53,686.06

$50,725.50

2. Lester’s has a new project with projected real cash flows of $12,200, $14,600, and $16,300 for Years 1 to 3, respectively. The nominal discount rate is 15.752 percent and the inflation rate is 4 percent. What is the net present value of the project if the initial cost is $25,000?

$7,711.64

$6,946.48

$10,508.70

$9,569.56

$9,248.74