Determine the cash flow from asset for each year

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Question - Raden Pte Ltd wants to embark on a 5-year project that generate an annual revenue of $800,000. The annual fixed cost is $220,000 and the annual variable cost is $350,000. The project requires a new equipment costing $150,000 to be depreciated using the straight-line policy and there is no salvage value at the end of the project. The project needs a net working capital of $100,000. The corporate tax rate is 25% and the required return as 16%.

A. Produce a Pro Formal Income Statement for the project and estimate the operating cash flow.

B. Determine the cash flow from asset for each year and compute the net present value for the project.

Reference no: EM133046402

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