Fit Factory is considering an investment of $375,000.00 in an asset with an economic life of five years. The firm estimates that the annual revenues and expenses at the end of the first year will be $210,000.00 and $66,000.00, respectively. Both revenues and expenses will grow at an annual rate of 3 percent. Fit Factory will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $44,000.00 at that time. The one-time net working capital investment of $19,000.00 is required immediately and will be recovered at the end of the project. All corporate cash flows are subject to a 34 percent tax rate.

a. What is the net operating income (NOI) from this project in Year 3?

ANSWER : Answer

b. What is the after-tax proceeds from selling this asset at the end of the project?

ANSWER : Answer

c. The net operating income at the end of the project is $87,073.27, what is the free cash flow from this project in that year?

ANSWER : Answer