What is the project's total nominal cash flow from assets for each year? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar, e.g., 32.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 $ $ $ $ $ $ Cash Flow -394,500 149,470 152,165 154,914 157,718 205,238
What is the project's total nominal cash flow from assets for each year? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole dollar, e.g., 32.) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 $ $ $ $ $ $ Cash Flow -394,500 149,470 152,165 154,914 157,718 205,238
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
Related questions
Question
![Perkins, Inc., is considering an investment of $378,000 in an asset with an economic life
of 5 years. The firm estimates that the nominal annual cash revenues and expenses at
the end of the first year will be $258,000 and $83,000, respectively. Both revenues and
expenses will grow thereafter at the annual inflation rate of 2 percent. The company will
use the straight-line method to depreciate its asset to zero over five years. The salvage
value of the asset is estimated to be $58,000 in nominal terms at that time. The one-time
net working capital investment of $16,500 is required immediately and will be recovered
at the end of the project. The tax rate is 23 percent.
What is the project's total nominal cash flow from assets for each year? (A negative
answer should be indicated by a minus sign. Do not round intermediate calculations
and round your answers to the nearest whole dollar, e.g., 32.)
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
$
$
$
6A6A
$
$
$
Cash Flow
-394,500
149,470
152,165
154,914
157,718
205,238](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1859cd6d-dfa0-430a-ad8d-209e2cb60ffb%2Ff0816e6e-40ae-4291-8bdc-708e679ab213%2Flpu9muq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Perkins, Inc., is considering an investment of $378,000 in an asset with an economic life
of 5 years. The firm estimates that the nominal annual cash revenues and expenses at
the end of the first year will be $258,000 and $83,000, respectively. Both revenues and
expenses will grow thereafter at the annual inflation rate of 2 percent. The company will
use the straight-line method to depreciate its asset to zero over five years. The salvage
value of the asset is estimated to be $58,000 in nominal terms at that time. The one-time
net working capital investment of $16,500 is required immediately and will be recovered
at the end of the project. The tax rate is 23 percent.
What is the project's total nominal cash flow from assets for each year? (A negative
answer should be indicated by a minus sign. Do not round intermediate calculations
and round your answers to the nearest whole dollar, e.g., 32.)
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
$
$
$
6A6A
$
$
$
Cash Flow
-394,500
149,470
152,165
154,914
157,718
205,238
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