The best manufacturing company is considering a new investment.

The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

 

Year 0

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Year 1

Year 2

Year

Year 4

investment

S 28 000

 

 

 

 

Sales revenue

 

S   14.500

S    15.000      9

15.500

S   12.500

Operating costs

 

3 103

3,200

3.300

2.500

Depreciation

 

7 000

7.000

7.000

7.000

Net aolun9 captal spending

340

390

440

340

 

 

a.  Compute the incremental net income of the inveStment tar each year (Do not round atennediate calculations.(

Year 1                                    Year 2                                  Year 3                                 Year 4

Net menthe                                   S      6366.60                     S       6541.60                  S      643.60                 S

b.  Compute ine incremental cash roes of the investment for each year (Do not round Intermediate calculations. A negative answer should be indicated by a minus sign.)

Year 0                                           Year 1                                         Year 2                                        Year 3                                     Year 4

Casn row                                                    51        S

c.  Suppose the appopnate discount rate as 12 percent What is the t4PV of the protect? (Do not round intermediate calculations and round your answer to 2 decimal places. e.g., 32.16.)

IWVs f–

 

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