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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.8 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $453,600 after 3 years. The project requires an initial investment in net working capital of $648,000. The project is estimated to generate $5,184,000 in annual sales, with costs of $2,073,600. The tax rate is 31 percent and the required return on the project is 10 percent. (Do not round your intermediate calculations.)
Required:
(a) What is the project's year 0 net cash flow?
(b) What is the project's year 1 net cash flow?
(c) What is the project's year 2 net cash flow?
(d) What is the project's year 3 net cash flow?
(e) What is the NPV?
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Fondren Machine Tools has total assets of $3,850,000 and current assets of $856,000. It turns over its fixed assets 1.9 times per year. Its return on sales is 6.7 percent. It has $1,890,000 of debt. What is its return on stockholders' equity? Roun..
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