Question: please solve it completly and properly using same values. thanks. He Revenue generated by a company product in each of the next five years are
He Revenue generated by a company product in each of the next five years are forecast as follows: Year Revenues 1 $40,000 2 $30,000 3 $20,000 4 $10,000 Thereafter $0 Expenses are expected to be 40% of revenues, and working capital required in each year is expected to be 20% of revenues in the following year. The product requires an immediate of $50,000 in plant and equipment. a) What is the initial investment in the product? b) If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight line depreciation, and the firm's tax rate is 40%, what are the project cash flows in each year? c) If the opportunity cost of capital is 10% what is project NPV? d) What is project IRR
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