Reference no: EM132816475

-Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $1.4 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. You expect that you will be able to sell the fixed asset for $250,000 at the end of the three-year expansion project. If the tax rate is 35%, what are the after-tax proceeds from the sale of the fixed asset at the end of the third year?

-Rising Star Inc is forecasting that their sales will increase by $250,000 next year, $275,000 the following year, and $300,000 in the third year. The company estimates that additional cash requirements will be 6% of the change in sales, inventory will increase by 5% of the change in sales, receivables will increase by 8% of the change in sales, and payables will increase by 10% of the increase in sales. Find the forecasted increase in net working capital for Rising Star over the next three years.