1. What is the present value of working capital expenditures if a project entails a working capital expenditure of $100,000 immediately, which is recovered in 8 years? What if the working capital expenditure is not incurred until one year into the project? Assume the tax rate is 20% and the opportunity cost of capital is 6%.
2. What are the relevant cash flows associated with depreciating a $200,000 capital expenditure over four years if the tax rate is 25% and the opportunity cost of capital 7%?