Required formula & step by step Robert Corporation is considering a new three-year project that requires an initial fixed investment of $2,400,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project requires an initial investment in net working capital of $120,000 which will be recovered at the end of the project’s life. It is estimated to generate $1,500,000, $1,800,000 and $2,400,000 in annual sales in these 3 years. Besides, it is estimated that the costs will be $$600,000, $800,000 and $1,000,000 respectively in these 3 years. The tax rate is 20 percent. A) Prepare the Pro Forma Income Statement for Robert Corporation in these 3 years. B) Prepare the Projected Operating Cash Flow Statement for Robert Corporation in these 3 years C) Suppose the required return on the project is 17 percent. What is the net present value (NPV) of the project? Explain why should accept this project.
Required formula & step by step
Robert Corporation is considering a new three-year project that requires an initial fixed investment of $2,400,000. The fixed asset will be
A) Prepare the Pro Forma Income Statement for Robert Corporation in these 3 years.
B) Prepare the Projected Operating Cash Flow Statement for Robert Corporation in these 3 years
C) Suppose the required return on the project is 17 percent. What is the
Step by step
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