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.
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
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