Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.1 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $243,600 after 3 years. The project requires an initial investment in net working capital of $348,000. The project is estimated to generate $2,784,000 in annual sales, with costs of $1,113,600. The tax rate is 34 percent and the required return on the project is 11 percent. (Do not round your intermediate calculations.)
Required:
(a) What is the project's year 0 net cash flow?
1) -3,275,600
2) -3,103,200
3) -1,381,074
4) -1,308,386
5) -3,448,000
(b) What is the project's year 1 net cash flow?
1) 1,381,074
2) 1,599,138
3) 1,453,762
4)1,526,450
5) 1,308,386
(c) What is the project's year 2 net cash flow?
1) 1,570,967
2) 1,649,515
3) 1,526,450
4) 1,308,386
5) 1,492,419
(d) What is the project's year 3 net cash flow?
1) 1,660,895
2) 1,937,711
3) 1,526,450
4) 1,753,167
5) 1,845,439
(e) What is the NPV?
1) 7,000,666
2) 461,792
3) 486,096.685
4) 10,402
5) 404,977