Revenues generated by a new fad product are forecast as follows

Year Revenues

1 $45000

2 $35000

3 $25000

4 $20000

Thereafter $0.00

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 investment of $60000 in plant and equipment.

Required & Explain

A.What is the initial investment in the product? Remember working Capital

B.If the plant and equipment are depreciated over 4 years to a salvage value of zero using a straight line depreciation, and the firm's tax rate is 20%, what are the project cash flows in each year? Assume the plant and equipment are worthless at the end of 4 years.

Year Cash flow

1 ?

2 ?

3 ?

C. If the opportunity cost of capital is 12% what is the project's NPV? ( A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places)

NPV ------------

D. 1.What is project IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places)

IRR ---------------%