Calculating project cash flow from assets

Assignment Help Financial Management

Reference no: EM132010336

Calculating Project Cash Flow from Assets

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.484 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 $193,200. The project requires an initial investment in net working capital of $276,000. The project is estimated to generate $2,208,000 in annual sales, with costs of $883,200. The tax rate is 32 percent and the required return on the project is 12 percent.

Required:

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

(Click to select)-2,760,000 -3,036,000 -2,898,000 -2,484,000 -2,622,000

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

(Click to select)1,165,824 1,107,533 1,049,242 1,224,115 1,282,406

(Click to select)1,165,824 1,049,242 1,224,115 1,107,533 1,282,406

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

(Click to select)1,415,880 1,651,860 1,573,200 1,730,520 1,494,540

(e) What is the NPV?

(Click to select)316,113 346,578 1,089,652 -502,015 330,075

Reference no: EM132010336

Questions Cloud

What is the dividend expected to be in nine years from today : A stock is expected to pay annual dividends forever. What is the dividend expected to be in 9 years from today?

After-tax interest cost on total debt : If the firm has debt of $7,500,000, total assets of $22,500,000, and an after-tax interest cost on total debt of 5 percent, what is the firm's ROA?

What can you legally ask during an interview : What can you legally ask during an interview? A qualified individual with a disability is a person who can show which of the following?

Estimate the market value of one share of charleston stock : Using only the information given, estimate the market value of one share of Charleston's stock.

Calculating project cash flow from assets : What is the project's year 0 net cash flow? What is the project's year 2 net cash flow? What is the project's year 3 net cash flow?

What is its pretax cost of debt : Its WACC is 11.2 percent, and the tax rate is 21 percent. If Tiger's cost of equity is 14.5 percent, what is its pretax cost of debt?

What value should be used for the time zero cash flow : Apisco Tiger Inc. has spent $48,200 to design a new airline carry-on bag. What value should be used for the Time 0 cash flow?

Market believe will be stock price at end of three years : Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years?

The corporate valuation model approach : Using the corporate valuation model approach, what should be the company's stock price today?

User Account

All Pages