What is the projects annual operating cash flow

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Bygrave Corp. is considering a $600,000 capital investment in equipment. Bygrave intends to depreciate the equipment on a straight-line basis over three years. Assume that the equipment has no salvage value at the end of the project's life. To support the project, Bygrave expects accounts revievable to increase by $110,000, inventory to increase by $45,000, and accounts payable to increase by $55,000. The investment in net working capital will be fully recovered at the end of the project's life.

What is the project's total initial investment (including cash flow from capital spending and changes in NWC)?

$696,000
$703,000
$667,000
$700,000
$682,000

Bygrave forecasts incremental annual sales revenue of $940,000. Similarly, Bygrave expects total variable costs to increase by $500,000, and total fixed costs to increase by $80,000. Bygrave's marginal tax rate is 39%.

What is the project's annual operating cash flow?

$297,600
$279,300
$279,200
$318,800
$310,500

Bygrave estimates that this project has a required return of 15.0%. What is the projects NPV?

$24,576.23
$12.475.14
$33.709.13
$45,239.42
$102,548.37

What is the project's IRR?

22.38%
19.88%
19.73%
18.67%
17.08%

Reference no: EM13224000

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