The initial investment in a new plant will cost $1 million to build and these costs will be depreciated straight line to 0 at the end of the project, year 3, and the plant will be sold for $250,000.

It currently already owns the land where EA GAMES want to build the new plant, and it is currently valued at $250,000. The original price that the land was bought for equaled $150,000, 5 years ago, and the land can be sold for $300,000 at the end of the project.

The company expects to sell 50,000 items at a price of $59. The fixed costs are $110,000 and the variable cost per unit is $19.

The investment in NWC at the start of the project amounts to $50,000 and will be recouped at the end of the project. The tax rate is 35%.

What is the project cash flow for Year 0?

What is the annual operating cash flow from this project?

What is the After Tax Salvage Value of the manufacturing plant?

Answer rating: 100% (QA)

Answer Calculation of Project Cash Flow in year 0 Year 0 Cash Flow Investment in ... View the full answer