Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $662,691. The fixed asset will be depreciated straight-line to 61,885 over its 3-year tax life, after which time it will have a market value of $112,268. The project requires an initial investment in net working capital of $78,031. The project is estimated to generate $223,911 in annual sales, with costs of $101,913. The tax rate is 0.29 and the required return on the project is 0.12. What is the total cash flow in year 0? (Make sure you enter the number with the appropriate +/- sign)
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $662,691. The fixed asset will be depreciated straight-line to 61,885 over its 3-year tax life, after which time it will have a market value of $112,268. The project requires an initial investment in net working capital of $78,031. The project is estimated to generate $223,911 in annual sales, with costs of $101,913. The tax rate is 0.29 and the required return on the project is 0.12. What is the total cash flow in year 0? (Make sure you enter the number with the appropriate +/- sign)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $662,691. The fixed asset will be
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