Reference no: EM131148715
Mills Mining is considering an expansion project. The proposed project has the following features.
The project has an initial cost of $673--
this is also the amount which can be depreciated using the following depreciation schedule:
Year 1 is 33%,
Year 2 is 45%,
Year 3 is 15%,
and Year 4 is 7%.
If the project is undertaken, at t = 0 the company will need to increase its inventories by $101, and its accounts payable will rise by $80.
This net operating working capital will be recovered at the end of the projects life (t = 4).
If the project is undertaken, the company will realize an additional $519 in sales over each of the next four years (t = 1, 2, 3, 4).
The company's operating cost (not including depreciation) will equal $348 a year. The company's tax rate is 40 percent.
At t = 4, the projects economic life is complete, but it will have a salvage value of $213. The projects WACC = 10 percent.
What are the one-time cash flows associated with ending the project (i.e. terminal Cash Flows)?
Note, we only want terminal cash flows, not operating cash flows in the last year.
Show your answer to the nearest $.01. Do not use the $ or , sign in your answer.
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