The Anderson Airlines Group is analyzing a project that has projected incremental sales of $ 1 ,
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Question:
The Anderson Airlines Group is analyzing a project that has projected incremental sales of $ per
year and incremental costs of $ per year. The project requires an initial upfront investment in net
working capital NWC of $ No other investments in NWC are anticipated. Fixed assets of
$ are needed and belong in a CCA class. Assume that the asset class will remain open. The
project has a life of five years. At the end of the five years, the equipment has an estimated market value
of $ The company has a cost of capital of and is in the marginal tax bracket. Assume
that NWC will be recovered at the end of the project and that the halfyear rule is in effect.
What is the present value of the aftertax operating cash flow ignoring the impact of depreciation?
A $
B $
C $
D $
E $
Pretend that your answer to the previous question is exactly $ What would be the NPV of
the project?
A $
B $
C $
D $
E $
Please dont use excel, show me the formulas and how the numbers came to be I dont want to see random work. I will make sure to upvote if you do it right.
Answer is C and B respectively if that helps. Thank you
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