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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
P10-12 NPV and Modified ACRS [LO1]
|
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.5 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $504,000 after 3 years. The project requires an initial investment in net working capital of $720,000. The project is estimated to generate $5,760,000 in annual sales, with costs of $2,304,000. The tax rate is 35 percent and the required return on the project is 13 percent. (Do not round your intermediate calculations.) |
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| Required: | |
| (a) | What is the project's year 0 net cash flow? |
| Â | (Click to select)-2,704,192-6,498,000-7,220,000-6,859,000-2,854,425 |
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| (b) | What is the project's year 1 net cash flow? |
| Â | (Click to select)2,704,1922,854,4253,154,8903,305,1233,004,658 |
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| (c) | What is the project's year 2 net cash flow? |
| Â | (Click to select)3,257,6383,154,8903,420,5192,704,1923,094,756 |
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| (d) | What is the project's year 3 net cash flow? |
| Â | (Click to select)3,154,8903,989,4803,799,5053,419,5543,609,530 |
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| (e) | What is the NPV? |
| Â | (Click to select)623,444.514,314,634592,272654,617500,572 |
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