Question

P10-11 Calculating Project Cash Flow from Assets [LO Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.724 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 (salvage value) of $445,200. The project requires an initial investment in net working capital of $636,000. The project is estimated to generate $5,088,000 in annual sales, with costs of $2,035,200. The tax rate is 33 percent and the required return on the project is 16 percent. (a) What is the project's year 0 net cash flow (or cash flow from assets)? (Click to select) (b) What is the project's year 1 net cash flow (or cash flow from assets)? c) What is the project's year 2 net cash flow (or cash flow from assets)? Click to select) d) What is the project's year 3 net cash flow (or cash flow from assets)? (e) What is the NPV? (Click to select)

Answer 1

Year net eash Flow- Fixed Asset Investment: キS.ㅋ24 mq wetrorking capite king capie0 636m 6.36 m 13 Ya 3 Amau al Sales So 880o0 35200) (20352c Co sts Depeciation 10 00 190 8o0o1o80 S, 924 000-3 1(4480° (377구 Pt) 67016 1144goo (3ㅋ7784 1144800 3977 }4) 구67016 PBT Tax 33 7570| 6 67016 1 9o Pooo PAT () Depn itytet Tax 408000 o oo0 2,6 구 Sol 6 2/6구 Solb 26750 | 29P 2 cash Ftou 2 43 5o16

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