25 Jul WHAT WILL THE CASH FLOWS FOR THIS PROJECT BE?
You are evaluating a project for The Ultimate recreational tennis racket guaranteed to correct that Show more You are evaluating a project for The Ultimate recreational tennis racket guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $360 per unit and sales volume to be 1000 units in year 1; 1250 units in year 2; and 1325 units in year 3. The project has a 3-year life. Variable costs amount to $205 per unit and fixed costs are $100000 per year. The project requires an initial investment of $153000 in assets which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $31000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 39 percent and the required return on the project is 12 percent. (Use SL depreciation table) What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places.) Year 0 1 2 3 Total cash flow $ $ $ $ Show less
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