Expansion project-requires initial fixed asset investment

Assignment Help Financial Management

Reference no: EM13809592

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.566 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be sold for $121,800. The project requires an initial investment in net working capital of $174,000, all of which is recovered at the end of the project. The project is estimated to generate $1,392,000 in annual sales, with costs of $556,800. The tax rate is 35 percent and the required return on the project is 10 percent.

What is the project's year 3 net cash flow? HINT: This will include OCF.

Reference no: EM13809592

Questions Cloud

What is the mindset required to properly protect information : What is the mindset required to properly protect information? What role does reasoned paranoia play in the minded and how can an individual keep the proper balance between protecting information and enabling business

Tax rate would investor be indifferent between two bonds : Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds?

What are some of the stereotypes about people who join nrms : What are some of the stereotypes about people who join NRMs

What is the strips price : A STRIPS traded on May 1 2013, matures in 18 years on May 1 2031. Assuming a 6.1 percent yield to maturity, what is the STRIPS price?

Expansion project-requires initial fixed asset investment : Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.566 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be sold f..

Compare the two works fiction vs. non-fiction : Compare the two works (fiction vs. non-fiction) and list the ways in which these works are alike. Contrast the two works and list the ways in which these works are different.

Product selection paper and presentation : Use the same product you chose for the Product Selection Paper and Presentation.

Narration essay on a first date : A first date - An incident that revealed the true character of someone you knew.

Conflict and communication : Conflict and Communication

User Account

All Pages