Middlefield Motors is evaluating project Z. The project would require an initial investment of 56,500 dollars that would be depreciated to 5,000 dollars over 7 years using straight-line depreciation. The first annual operating cash flow of 19,500 dollars is expected in 1 year, and annual operating cash flows of 19,500 dollars are expected each year forever. Middlefield Motors expects the project to have an after-tax terminal value of 296,000 dollars in 3 years. The tax rate is 40 percent. What is (X+Y)/Z if X is the project's relevant expected cash flow for NPV analysis in year 3, Y is the project's relevant expected cash flow for NPV analysis in year 4, and Z is the project's relevant expected cash flow for NPV analysis in year 2? Round your answer to 2 decimal places (for example, 2.89, 0.70, or 1.00).

Answer rating: 100% (QA)

Since operating cash flow is already giv... View the full answer