What is projects total nominal cash flow from assets

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Reference no: EM131180303

Price, Inc., is considering an investment of $370,000 in an asset with an economic life of 5 years.

The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $250,000 and $75,000, respectively.

Both revenues and expenses will grow thereafter at the annual inflation rate of 3 percent. Price will use the straight-line method to depreciate its asset to zero over five years.

The salvage value of the asset is estimated to be $50,000 in nominal terms at that time. The one-time net working capital investment of $12,500 is required immediately and will be recovered at the end of the project.

All corporate cash flows are subject to a 34 percent tax rate.

What is the project’s total nominal cash flow from assets for each year?

Year 0:

Year 1:

Year 2:

year 3:

Year 4:

Year 5:

Reference no: EM131180303

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