Belton, Inc. is considering the purchase of equipment with the following characteristics:

Initial cash investment $ 2,500,000

Working capital requirement $ 200,000 *

Annual projected cash inflows $ 600,000

Special repairs cost needed at the end of year 6 $ 100,000 **

Salvage Value $ 75,000

Length of the project (years) 12

Required rate of return 12%

Assume the working capital will be released at the end of the project

Is this an inflow or outflow?

Is this single sum or annuity?

Please show all calculations.

Working with capital.

Calculating the Net Present Value

Thank you!

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of the project we need to determine the cash flows for each y... View the full answer