Year Revenues 1 $ 50,000 2 3 4 Thereafter 40,000 20,000 10,000 Expenses are expected to...

  

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Year Revenues 1 $ 50,000 2 3 4 Thereafter 40,000 20,000 10,000 Expenses are expected to be 50% 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 $40,000 in plant and equipment. Required: 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 straight-line depreciation, and the fin tax rate is 30%, what are the project cash flows in each year? c. If the opportunity cost of capital is 12%, what is project NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D What is the initial investment in the product? Remember working capital. Initial investment 50,000 Year Cash Flow 1 2 3 4 Year Revenues 1 $ 50,000 2 3 4 Thereafter 40,000 20,000 10,000 Expenses are expected to be 50% 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 $40,000 in plant and equipment. Required: 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 straight-line depreciation, and the fin tax rate is 30%, what are the project cash flows in each year? c. If the opportunity cost of capital is 12%, what is project NPV? d. What is project IRR? Complete this question by entering your answers in the tabs below. Req A Req B Req C and D What is the initial investment in the product? Remember working capital. Initial investment 50,000 Year Cash Flow 1 2 3 4