Question: Eastern Tech is considering a new project that will require $ 1 0 9 , 0 0 0 of fixed assets and net working capital

Eastern Tech is considering a new project that will require $109,000 of fixed assets and net working capital of $12,000. The fixed assets will be depreciated on a straight-line basis to zero salvage value over 3 years. The project is expected to produce an operating cash flow of $43,000 in the first year with that amount decreasing by 5% annually for two years before the project is shut down. The fixed assets can then be sold for $45,000 at the end of the project and all of the working capital will be recovered. The discount rate is 12.2% and the tax rate is 23%. What is cash flow for year 0,1,2,3 and NPV?

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