Eastern Tech is considering a new project that will require $127,000 of fixed assets and net working capital of $8,000. 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 $49,000 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 $35,000 at the end of the project and all of the working capital will be recovered. The discount rate is 13.9% and the tax rate is 23%.

Question 19

What is the cash flow for time 0? (Round your answer to the nearest whole dollar.)

Question 20

Continued with the previous question, what is the cash flow for year 1? (Round your answer to the nearest whole dollar.)

Question 21

Continued with the previous question, what is the cash flow for year 2? (Round your answer to the nearest whole dollar.)

Question 22

Continued with the previous question, what is the cash flow for year 3? (Round your answer to the nearest whole dollar.)

Question 23

What is the NPV of the project? (Round your answer to the nearest whole dollar.)

Question 24

Should you accept the project?

Yes

No