8-Foley Systems is considering a new project whose data are shown below. Under the new tax law, the equipment for the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t=0. After the project's 3-year life, the equipment would have zero salvage value. The project would require additional net operating working capital (NOWC) that would be recovered at the end of the project's life. Revenues and operating costs are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows from operations are constant in Years 1 to 3.) Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC Equipment cost Required net operating working capital (NOWC) 10.0% $75,000 $15,000 Annual sales revenues Annual operating costs Tax rate $73,000 $25,000 25.0% a. $29,549 b. $18,970 c. $4,571 d. $20,001 c. $11348 o 7. Desai Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price should increase with inflation. Fixed costs will also be constant, but variable costs should rise with inflation. The project should last for 3 years. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. At the end of the project's life, the equipment would have no salvage value. No change in net operating working capital (NOWC) would be required for the project. This is just one of many projects for the firm, so any losses on this project can be used to offset gains on other firm projects. What is the project's expected NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number. 10.0% $200,000 56,000 WACC Equipment cost Units sold Average price per unit, Year 1 Fixed op. cost excl. depr (constant) Variable op. cost/unit, Year 1 Expected annual inflation rate Tax rate a. $98,569 b. $68,303 c. 551,384 d. $95,434 e. $48,877 $25.00 $150,000 $20.20 5.0% 25.0% 6. Your company, RMU Inc., is considering a new project whose data are shown below. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t=0. What is the project's Year 1 cash flow? $26,750 Sales revenues Operating costs Tax rate $12,000 25.0% a. $2,350 b. $4,345 c. $12,883 d. $11,063 c. $10,529