Lexus is considering an investment of 383000 in an asset


Lexus. is considering an investment of $383,000 in an asset with an economiclife of 5 years. The firm estimates that the nominalannual cash revenuesand expenses at the end of the first year will be $263,000 and $88,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 4 percent. Lexus will use the straight-line methodto depreciate its asset to zero over five years. The salvagevalue of the asset is estimated to be $63,000 in nominal terms at that time. The one-timenet working capitalinvestment of

$19,000 is required immediately and will be recovered at the end of the project. All corporatecash flows are subject to a 35 percent tax rate. What is the project's total nominal cash flow from assets for each year?

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Financial Econometrics: Lexus is considering an investment of 383000 in an asset
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