Determine the terminal after tax non operating cash flow

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Nyke inc is a sporting shoes company which is considering investing in a new equipment for the production of a new line of tennis and football shoes for its elite custoners. the new equipment will cost 250000 and an additional 80000 is needed for installation. the equipment which falls into the macrs 3 -yr class would be sold after three years for $35000 the equipment will generate additional annual revenues of $210000 and will have annual operating expenses of $60000. an inventory investment of 60000 is required during the life of the project nyke is in the 30 percent tax bracket and has the same risk as the firms exisiting assets. its exisiting captial is 15%

a. calculate the initial outlay of the project.

b. calculate the annual after tax operating cash flow for years 1-3

c. determine the terminal after tax non operating cash flow

d. what is the project npv?

e. what is the estimated internal rate of return of the project? should the project be accepted based on the irr criterion? why?

Reference no: EM131559624

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