What is the total cash outflow in year

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A project involves an immediate investment of $10,500 for the purchase and installation of equipment. The project will require the immediate purchase of $949 in inventory and increase in accounts receivable of $716. Accounts payable will increase $595. The project is expected to generate operating cashflows in the amount of $4,990 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000 and the changes in working capital are reversed. The firm gets 60% of its capital from common stock and 40% from debt. The debtholder's required rate of return is 7%. The equity holder's required rate of return is 12%. The firm's tax rate is 20%.

Question 1: What is the firm's weighted average cost of capital?

Question 2: What is the total cash outflow in year 0 (today)?

Question 3: What is the total cash inflow at the end of year 4?

Question 4: What is the net present value of the project?

Reference no: EM132513101

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