is considering a new 3- year - long project that would involve using specialized scanning software to scansubmitted screenshots in low resolution and convert them into high resolution text documents that there's currently astrong market for. Course Hero requires a 17 percent annual return on this uncertain project, high enough tocompensate for the underlying uncertainty of future cash inflows. A decision to accept the project would be followed byan immediate investment of $5.8 million into purchasing the software. At the end of the project Course Hero is hoping tobe able to find a different company in similar line of business that would be willing to pay $449, 400 for the software andits future ownership.other similar software, its value will be dropping over its economic life according to the 3- yearMACRS depreciation schedule. (See this MACRS Table) Course Hero pays taxes on its annual income and other taxablecash flows according to a 32 % tax rate. Course Hero estimates $5, 136, 000 in sales revenues and $2, 054, 400 inoperating costs each year of the project. Course Hero would also need to spend $642, 000 right away to build a cashbuffer that would be used to draw the funds to cover the expenses to quickly hire specialists to fix any unforeseensoftware bugs that mae throughout the life of the project. (Do not round your intermediate calculations.) Required:(a) The project's year 0 total cash flow = (Click to select) (b) The project's estimated year 1 total cash flow(Click to select) (c) The project's estimated year 2 total cash flow_ (Click to select) (d) The project'sestimated year 3 total cash flowa_(Click to select) (e) The Net Present Value of this project.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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is considering a new 3- year - long project that would involve using specialized scanning software to scansubmitted screenshots in low resolution and convert them into high resolution text documents that there's currently astrong market for. Course Hero requires a 17 percent annual return on this uncertain project, high enough tocompensate for the underlying uncertainty of future cash inflows. A decision to accept the project would be followed byan immediate investment of $5.8 million into purchasing the software. At the end of the project Course Hero is hoping tobe able to find a different company in similar line of business that would be willing to pay $449, 400 for the software andits future ownership.other similar software, its value will be dropping over its economic life according to the 3- yearMACRS depreciation schedule. (See this MACRS Table) Course Hero pays taxes on its annual income and other taxablecash flows according to a 32 % tax rate. Course Hero estimates $5, 136, 000 in sales revenues and $2, 054, 400 inoperating costs each year of the project. Course Hero would also need to spend $642, 000 right away to build a cashbuffer that would be used to draw the funds to cover the expenses to quickly hire specialists to fix any unforeseensoftware bugs that mae throughout the life of the project. (Do not round your intermediate calculations.) Required:(a) The project's year 0 total cash flow = (Click to select) (b) The project's estimated year 1 total cash flow(Click to select) (c) The project's estimated year 2 total cash flow_ (Click to select) (d) The project'sestimated year 3 total cash flowa_(Click to select) (e) The Net Present Value of this project.

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