Recreational tennis racket-what will cash flows for project

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Reference no: EM131972791

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $430 per unit sales volume to be 1,000 units in year 1; 1,2550 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $240 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $174,000 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $38,000. NWC requirements at the beginning of each year will be approximately 25 percent of the project sales during the coming year. The tax rate is 34 percent and the required return on the project is 10 percent. (Use SL depreciation table) What will the cash flows for this project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to 2 decimal Places.)

Reference no: EM131972791

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