Question: A production project will generate an expected operating cash flow of $50,000 per year for 4 years (years 1 4). Undertaking this 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 this project will require an increase in the companys networking capital (inventory) of $10,000 today (year 0). At the end of the project (year 4), inventory will return to the original level. New capital spending for the project would cost $150,000. The marginal tax rate is 7%. The weighted average cost of capital for the firm is 9%. Sketch a timeline to illustrate the relevant cash flows (again type the table and/or explain in words). 8. What is the present value of this project? 8. A production project will generate an expected operating cash flow of $50,000 per year for 4 years (years 1 4). Undertaking this project will require an increase in the companys networking capital (inventory) of $10,000 today (year 0). At the end of the project (year 4), inventory will return to the original level. New capital spending for the project would cost $150,000. The marginal tax rate is 7%. The weighted average cost of capital for the firm is 9%. Sketch a timeline to illustrate the relevant cash flows (again type the table and/or explain in words).

What is the present value of this project?

Can someone show me in detail how to find the PV at 9% and how to find discounted cash flow? I am stuck.

Year	Calculations	CF	PV 9%	Discounted CF
0	(-150,000 - 10,000)			-160000
1		$ 50,000.00
2		$ 50,000.00
3		$ 50,000.00
4		$ 50,000.00
NPV

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