Question: 3. Kurt's Cabinets is considering a project that will require $80,000 in fixed assets and another $20,000 in net working capital in year 0. The

3. Kurt's Cabinets is considering a project that will require $80,000 in fixed assets and another $20,000 in net working capital in year 0. The project is expected to produce sales of $110,000 with associated costs of $70,000 per year (through year 1 to year 4). The project has a 4-year life. The company uses straight-line depreciation to a zero book value over the life of the project. The tax rate is 25%

a) What is the initial cost?

b) What is the operating cash flow for this project?

c) At the end of this project, the company could free up $20,000 in net working capital and sell the fixed asset at $10,000. The tax rate for capital gains is 25%. What is the salvage value in year 4?

d) What is the NPV for this project at a 10% discount rate?

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