Question: * Initial Cashflow , not operational incremental cashflow! A firm is considering an EXPANSION project. The project will require a $10,000 equipment investment and an

*Initial Cashflow, not operational incremental cashflow! A firm is considering an EXPANSION*Initial Cashflow, not operational incremental cashflow!

A firm is considering an EXPANSION project. The project will require a $10,000 equipment investment and an additional $1200 in Working Capital. This is a 5 year project, and the firm will depreciate the new equipment at a $2000 per year. The project will result in $4600 per year in additional revenues. Annual operating costs will increase by $300/ year. At shutdown, the equipment will have no salvage value. The firm's relevant tax rate is 35% WHAT IS THE INCREMENTAL INITIAL CASHFLOW

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