Summer Tyme, Inc., is considering a new 3-year expansion project that requires a

Question

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.916 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $226,800. The project requires an initial investment in net working capital of $324,000. The project is estimated to generate $2,592,000 in annual sales, with costs of $1,036,800. The tax rate is 32 percent and the required return on the project is 13 percent. The NPV for this project is $. (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Particular/Year 0 1 2 3 Initial Investment(A) 2916000 Working capital(B) 324000 Salvage Value

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