Considering new three year expansion project

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Reference no: EM131888410

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.3 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $256,200 after 3 years. The project requires an initial investment in net working capital of $366,000. The project is estimated to generate $2,928,000 in annual sales, with costs of $1,171,200. The tax rate is 34 percent and the required return on the project is 16 percent. (Do not round your intermediate calculations.)

Required:

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

a. -3,482,700

b.-3,299,400

c.-1,456,778

d.-1,380,106

e.-3,666,000

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

a.1,610,123

b.1,686,796

c.1,456,778

d.1,380,106

e. 1,533,451

a 1,658,217

b 1,610,123

c 1,380,106

d 1,741,128

e 1,575,306

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

a.1,846,694

b. 1,749,500

c. 1,610,123

d. 2,041,083

e. 1,943,888

(e) What is the NPV?

a. 103,557

b. 140,314

c. 133,632.55

d. 126,951

e. 7,110,045

Reference no: EM131888410

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