Question $35(1$ point$)$

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Using the information in the following table, the initial net cash flow $($i$.$e$.,$ CFO$)$ for this project is $ $$ ASC, Ine is considering the production of a new line of soft drinks at its Springfield, IL plant. The CFO of ASC, Inc. is provided with the following information on the new project:

The expansion will require the immediate purchase of new machinery for $$39,000,000.$

The firm has spent $$1,000,000$ to train workers to use the new machinery.

The incremental sales from this project are expected to be $$21,300,000$ per year. The incremental operating expenses $($excluding depreciation$)$ are expected to equal $$11,300,000$ per year.

The company uses straight$-$line deprectation The project has an economic life of $20$ years. The machinery has a salvage value of $$1,000,000$ and will be sold for that amount at the conclusion of the project.

The company will increase net working capital by $$1,200,000$ at the beginning of the project, and it will be liquidated at the end of the project.

ASC Inc.$\text{'}$s marginal tax rate is $40\%.$

ASC Inc.$\text{'}$s weighted average cost of capital $($WACC$)$ is $14\%.$

$-30,200,000$

$-40,200,000$

$-88,200,000$

$-38,200,000$

$-29,400,000$