Project Evaluation (L02)Revenues generatod by a new fad product are forecast as
ID: 2632763 • Letter: P
Question
Project Evaluation (L02)Revenues generatod by a new fad product are forecast as follows Expenses are expected to be 40% of revenues, and working capital required m each year is expected to be 30% of revenues in the following year The product requires an immediate investment of $70,000 in plant and equipment What is the initial investment in the product? Remember working capital If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-fence depredation, and the firm's tax rate is 20%. what are the project cash flows m each year? (Enter your answers in thousands of dollars. Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Cash Flow If the opportunity cost of capital is 10%. what is project NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)What is project IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Explanation / Answer
a. 88000
b. cashflow
1 22700
2 15000
3 12000
4 12000
c. NPV= $-37755.00
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