10 Problem 9-14 Project Evaluation (LO2) Revenues generated by a new fad product are forecast as follows: 10 points Year 1 2. 3 4 Thereafter Revenues $45,000 40,000 30,000 20,000 B eBook Print Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 30% of revenues in the following year. The product requires an immediate investment of $50,000 in plant and equipment. References Required: a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 40%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 15%, what is the project's NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Reg A Reg B Reg C and D What is the initial investment in the product? Remember working capital. Initial investment ReqB > 10 Problem 9-14 Project Evaluation (LO2) Revenues generated by a new fad product are forecast as follows: 10 points Year 1 2. 3 4 Thereafter Revenues $45,000 40,000 30,000 20,000 eBook Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 30% of revenues in the following year. The product requires an immediate investment of $50,000 in plant and equipment. Print References Required: a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 40%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 15%, what is the project's NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 40%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. (Do not round intermediate calculations.) Year Cash Flow 1 2 3 4 10 Problem 9-14 Project Evaluation (LO2) Revenues generated by a new fad product are forecast as follows: 10 points Year 1 2 3 4 Thereafter Revenues $45,000 40,000 30,000 20,000 0 eBook Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 30% of revenues in the following year. The product requires an immediate investment of $50,000 in plant and equipment. Print References Required: a. What is the initial investment in the product? Remember working capital. b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight-line depreciation, and the firm's tax rate is 40%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years. c. If the opportunity cost of capital is 15%, what is the project's NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Reg A Req B Reg C and D c. If the opportunity cost of capital is 15%, what is the project's NPV? (A negative value should be indicated by a minus sign. Do not round Intermediate calculations. Round your answer to 2 decimal places.) d. What is project IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) C NPV d. IRR %