You are considering creating a new product line in warehouse space that originally cost you $52,895 5 years ago.

• The required machinery would cost $6,786, should last 9 years, after which could be scrapped for $887.
• Net working capital would need to immediately increase by $4,332, but could return to normal levels after 9 years.
• Annual sales and operating costs are expected to be $7,097 and $1,688, respectively.
• 18% of customers are expected to switch over from your existing product lines.
• Your firm's cost of capital (WACC) is 8.3% and effective corporate tax rate is 43%.
• Your firm uses straight line depreciation as its depreciation method.

What is this project's incremental cash flow in its final year 9? Enter your answer in decimal format to two decimal places (e.g., $1,538.72 would be entered as 1538.72).

Answer rating: 100% (QA)

Initial Cash Flow Cost of Machinery 6786 Increase in ... View the full answer