3)

Queen Markisha is evaluating a new 6-year project that will have annual sales of $415,000 and costs of $287,000. The project will require fixed assets of $515,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, 11.52 percent, and 5.76 percent, respectively. The company has a tax rate of 40 percent. What is the operating cash flow for Year 3?

-----Multiple Choice

A) $90,752

B) $116,352

C) $136,128

D) $111,133

E) $100,531

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4)

Fun With Finance is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.32 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 $336,000. The project requires an initial investment in net working capital of $480,000. The project is estimated to generate $3,840,000 in annual sales, with costs of $1,536,000. The tax rate is 33 percent and the required return on the project is 15 percent.

(a)	What is the project's year 0 net cash flow?
	(Click to select) -5,280,000 -4,320,000 -5,040,000 -4,800,000 -4,560,000

(b)	What is the project's year 1 net cash flow?
	(Click to select) 2,220,768 2,018,880 1,816,992 2,119,824 1,917,936

(c)	What is the project's year 2 net cash flow?
	(Click to select) 2,119,824 1,917,936 2,018,880 1,816,992 2,220,768

(d)	What is the project's year 3 net cash flow?
	(Click to select) 2,587,800 2,996,400 2,860,200 2,451,600 2,724,000

(e)	What is the NPV?
	(Click to select) 1,876,968 -865,019 286,845 273,185 289,558