What is the net investment outlay

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Question - Campbell Company is considering the purchase of a new printing press. The press costs $320,000 and an additional $40,000 is needed to install it. The press will be depreciated straight-line to zero over 5 years. The press will not increase revenues but reduce expenses by $90,000 annually. The press will be sold after 5 years for $40,000 and requires net working capital of $70,000 during the life of the press. Assume a tax rate of 40% and a WACC of 11%

1) What is the net investment outlay?

2) What is the additional after tax incremental cash flow in the first year of use?

3) What is the terminal non operating cash flow (TNOCF) at the end of year 5?

4) What is the NPV of the project?

Reference no: EM133163565

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