Summer tyme inc is considering a new 3-year expansion, Ask an Expert

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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.996 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $310,800. The project requires an initial investment in net working capital of $444,000. The project is estimated to generate $3,552,000 in annual sales, with costs of $1,420,800. The tax rate is 33 percent and the required return on the project is 12 percent.

Required:

(a) What is the project's year 0 net cash flow?

(b) What is the project's year 1 net cash flow?

(d) What is the project's year 3 net cash flow?

(e) What is the NPV?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9872076

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