Data Mining is considering an expansion project. The companys management has decided that the initial cost of the project is $300,000 with an additional installment cost of $80,000 and consultation cost for $20,000. The project life is four years with a salvage value of $60,000 and it will be depreciated over four years according to straight-line method. Management has also decided that an additional of $45,000 in inventories and $12,000 in accounts payable needed if the project taken today. The weighted average cost of capital of 10%, and tax rate is 40%

During the next four years the total sales and total operating costs (excluding deprecation) are expected as following:

years	1	2	3	4
total sales	525100	642000	504400	698500
total operation costs ( excluding depreciation )$	234000	302300	272000	440000

.

1. What is the net cost of the equipment for capital budgeting purposes? (Hint: Calculate the initial investment outlay). *

$400,000

$413,000

$433,000

$457,000

None of the above

2. The depreciation expense for each of the four years is: *

$75,000

$95,000

$100,000

$103,250

None of the above

3. The after-tax Cash Flow for the 2nd year is: *

$233,820

$241,820

$243,820

$245,120

None of the above

4. The after-tax Cash Flow for the 3rd year is: *

$180,740

$179,440

$177,440

$169,440

None of the above

5. The Terminal Value (TV) is: *

$36,000

$57,000

$69,000

$117,000

None of the above

6. The NPV value of the project is (round to the nearest number): *

$220,023

$245,382

$251,721

$292,510

None of the above