Requires initial fixed asset investment

Assignment Help Financial Management

Reference no: EM131905725

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.376 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $184,800. The project requires an initial investment in net working capital of $264,000. The project is estimated to generate $2,112,000 in annual sales, with costs of $844,800. The tax rate is 32 percent and the required return on the project is 9 percent.

Required:

(a) What is the project's year 0 net cash flow?

(b) What is the project's year 1 net cash flow?

(d) What is the project's year 3 net cash flow?

(e) What is the NPV?

Reference no: EM131905725

Questions Cloud

Value of annuity after considering effects of inflation : What is the present value of the annuity after considering the effects of inflation?"

What is the present value of all the future dividends : The discount rate is 12 percent. What is the present value of all the future dividends?

What is snoopy total outlay : Snoopy borrows 6500 dollars to pay for his new super-deluxe doghouse. what is Snoopy's total outlay?

Result of your ownership of buylo stock : How much dividend income will you receive on July 31st as a result of your ownership of BuyLo stock?

Requires initial fixed asset investment : Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.376 million.

Firm enterprise value is equal to market value : A firm's enterprise value is equal to market value of its debt and equity, less the firm's holdings of cash and cash equivalents

Analysis when using debt ratio and profitability ratio : Explain the trend analysis when using debt ratio and profitability ratio?

Annual after-tax operating cash flow : Calculate the annual after-tax operating cash flow for Years 1 - 4.

How are corporate and treasury bonds issued : What are corporate and treasury bonds evidence of? How are corporate and treasury bonds issued? What are the different type of bonds ?

User Account

All Pages