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Question: The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 40 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

Year 0 Year 1 Year 2 Year 3 Year 4

Investment $ 26,000

Sales revenue $ 13,500 $ 14,000 $ 14,500 $ 11,500

Operating costs 2,900 3,000 3,100 2,300

Depreciation 6,500 6,500 6,500 6,500

Net working capital spending 320 370 420 320 ?

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