Question: A production project will generate an expected operating cash flow of $50,000 per year for 4 years (years 1 4). Undertaking the project will require

A production project will generate an expected operating cash flow of $50,000 per year for 4 years (years 1 4). Undertaking the project will require an increase in the companys net working capital (inventory) of $10,000 today (year 0). At the end of the project (year 4), inventory will return to the original level. The project would cost $150,000. The marginal tax rate is 10%. The weighted average cost of capital for the firm is 9%. Explain the

timeline with relevant cash flows (what is the cash flow for year 0, year 1, and etc. Be sure to show relevant work!)

What is the net present value of this project? Do you accept or reject?

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