Considering new three year expansion project

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Reference no: EM131978798

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.862 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 $222,600. The project requires an initial investment in net working capital of $318,000. The project is estimated to generate $2,544,000 in annual sales, with costs of $1,017,600. The tax rate is 31 percent and the required return on the project is 14 percent. Required: (a) What is the project's year 0 net cash flow? (b) What is the project's year 1 net cash flow? (c) What is the project's year 2 net cash flow? (d) What is the project's year 3 net cash flow? (e) What is the NPV?

Reference no: EM131978798

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