Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $302,400 after 3 years.
The project requires an initial investment in net working capital of $432,000.
The project is estimated to generate $3,456,000 in annual sales, with costs of $1,382,400. The tax rate is 32 percent and the required return on the project is 17 percent. (Do not round your intermediate calculations.)
Required:
(a) What is the project's year 0 net cash flow?
(b) What is the project's year 1 net cash flow?
(c) What is the project's year 2 net cash flow?
(d) What is the project's year 3 net cash flow?
(e) What is the NPV?