Revenues generated by a new fad product are forecast as follows Year 1 - $56000 Year 2 - $40000 Year 3 - 30000 Year 4 - 20000 thereafter 0 Expenses are expected to be 50% of revenues, and the working capital required each year is expected to be 20% of revenues in the following year. the product requires an immediate investment of $60000 in plant and equipment 1. What is the initial investment in the product? remember working capital 2. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation and the firm's tax rate is 40% what is the project each flows in each year? assume the plant and equipment are worthless at the end of 4 years 3. If the opportunity cost of capital is 12% what is the project's NPV What is the project IRR?
Revenues generated by a new fad product are
Year 1 - $56000
Year 2 - $40000
Year 3 - 30000
Year 4 - 20000
thereafter 0
Expenses are expected to be 50% of revenues, and the working capital required each year is expected to be 20% of revenues in the following year. the product requires an immediate investment of $60000 in plant and equipment
1. What is the initial investment in the product? remember working capital
2. If the plant and equipment are
3. If the
What is the project IRR?
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