Compute the project after-tax cash flow

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Reference no: EM133253255

Using the eight-year model and the estimated expenses below, please answer the following questions showing calculations please. I need to check my work. 

1. At the end of the project, what are the earnings before taxes? 

2. At the current tax rate (35%), what is the net income?

3. Compute the project's after-tax cash flow: Operating cash flow equals Sales - Costs - Depreciation (1 - t) + Depreciation - change in net working capital. 

4. Compute and interpret the project's NPV, IRR, and profitability index. 

Estimated Expenses

  • Total projected up-front costs: $2,200,000 
  • Total projected cost of capital: $195,000
  • Total projected sales: $925,000
  • Total projected cash expense: $310,000
  • Total projected depreciation: $250,000

Reference no: EM133253255

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