Question: Please Help with the steps by showing all work, will thumbs up. Thank you! Compute Cash flows for the initial time period (year O) and
Compute Cash flows for the initial time period (year O) and the future four years of the project. The firm is planning to spend $220,000 on a machine to produce the new video game. Shipping and installation costs = $20,000. The machine is depreciated using straight line depreciation to an ending salvage value of $0 over its 4-year useful life. Revenue from the new video game is expected to be $600,000 in the year 1 and 5% increase every year until year 4. Operating cost = $250,000 in year 1 and are expected to increase by 5% each year until year 4 The firm has a tax rate of 34% It expects net working capital to increase by $100,000 at the beginning of the project, 20,000 in years 1 and 2. Net working capital is collected back at the end of the project. The project lasts for four years. What are the cash flows of the project
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