What are the projects net cash flow

Assignment Help Corporate Finance
Reference no: EM13193215

Summer Tyme, Inc. has cash available and is considering a new three-year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed assets will be depreciated straight-line to zero over its three-year tax life. The fixed assets will have a market value of $200,000 at the end of the project. The project is estimated to generate following revenues during those three years: $2,000,000 for year one, $2,500,000 for year two, and $3,000,000 for year three. Costs are equal to 20% of the same year sales. The project net working capital is equal to 10% of the next year's revenue. The tax-rate is 35%. What are the project's net cash flows for years 0-3? What is the IRR on this project?

1574_Net cash flows.png

Reference no: EM13193215

Questions Cloud

Which of the following is a characteristic of every binomial : Which of the following is a characteristic of every binomial distribution?
Why do these diameters not have a binomial distribution : Ten bolts were selected randomly from a production line and the diameter of each was measured. Why do these diameters not have a binomial distribution?
What is the total expected per-customer revenue for pizza : What is the total expected per-customer revenue for pizza slice sales and arcade token sales?
How will the standard error change : The standard error of the sample mean is equal to 5 when n=25. If the sample size increases by a factor of four, how will the standard error change?
What are the projects net cash flow : What are the project's net cash flows for years 0-3? What is the IRR on this project and the project net working capital is equal to 10% of the next year's revenue.
Calculate an 89% confidence interval for true mean number : Calculate an 89% confidence interval for the true mean number of sheep counted by insomniacs.
Find the work required to empty the tank by pumping : A tank in the shape of an inverted right circular cone has height 9 meters and radius 13 meters. It is filled with 6 meters of hot chocolate.
How to find the center and radius of the sphere : The points (4, 1, 7) and (10,9,7) are endpoints of a diameter of a sphere. How to find the center and radius of the sphere?
Calculate area of a square a square picture is mounted : calculate area of a square a square picture is mounted in a frame 1 cm wide. the area of the picture is 2/3 of the total area. find the length of a side of the picture.

Reviews

Write a Review

Corporate Finance Questions & Answers

  Evaluation of stock price and stock

Calculation of stock price and stock to be allotted with given data - c. How many shares of common stock must be issued at the value computed in part b to eliminate the deficit computed in part a?

  Use afn equation to estimate the funds

After tax profit margin is 3 percent & the company pays out 40 percent of its earnings in dividends. Sales last year were 12,000. Profit Margin & payout ratio will remain steady.

  Compare a real estate investment in baghdad

Are markets like the NYSE, NASDAQ, and CME fair markets explain your answer and also compare a real estate investment in Baghdad with a same investment in Chicago.

  Discuss the results of the sensitivity analysis

Discuss the results of the sensitivity analysis and the implications of changes in revenue.

  Conduct research to find out about the budgeting process

Choose any health care firm with which you are familiar with in the U.S., & think about the role of budgeting in that particular organization.

  Evaluate the ear for each investment choice

You have found three investment choices for a one-year deposit: 10.5% APR compunded monthly,

  Find expected rate of return & standard deviation of return

Consider the following probability distribution of returns estimated for a proposed project that involves a new ultrasound machine:

  Plan for retirement

Both men will retire next year and thus will need the first cash flow from his retirement fund at that time. If both can earn an 8% rate of return, evaluate how much each brother will need today to realize his retirement dream.

  Prepare a report on apple inc

Executive summary -  A brief summary introduction focused on important analytical results

  Influencing state revenue collections and expenditures

Explain why state governments cut spending or rising taxes when revenues fall short of expenditures?

  Effective break even analysis

If I sell wigs, which have a huge profit margin of 70 percent, and I sell cups which only have a thin 10 percent margin, is break even analysis effective or are these product margins too far apart?

  Identify the companys assets

Looking at Money Cares Investment Company to outline problematic or risk areas in firm's financial procedures. Upon reviewing the budget, you notice that there is overspending in marketing supplies,

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd