What is the terminal year non-operating cash flow

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Your company, Dominant Retailer, Inc., is considering a project whose data are shown below. Revenue and cash operating expenses are expected to be constant over the project's 5 year expected operating life; annual sales revenue is $99,000.00 and cash operating expenses are $49,750.00. The new equipment's cost and depreciable basis is $155,000.00 and it will be depreciated by MACRS as 5 year property. The new equipment replaces older equipment that is fully depreciated but can be sold for $7,000. In addition, the new equipment requires an additional $5,000 of net operating working capital, which can be fully recovered at the end of the project. The new equipment is expected to be sold for $10,750 at the end of the project in year 5. The marginal tax rate is 20.00%.

Question 1: What is the project's Initial Cash Outlay at Year 0?

Question 2: What is the Year 4 Net Operating Cash Flow?

Question 3: What is the Terminal Year Non-Operating Cash Flow at the end of Year 5?

Question 4: What is the NPV of the Project if Dominant Retailer's WACC is 14.75%?

Reference no: EM132526252

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