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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed...

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Finance

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $6.318 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $491,400. The project requires an initial investment in net working capital of $702,000. The project is estimated to generate $5,616,000 in annual sales, with costs of $2,246,400. The tax rate is 30 percent and the required return on the project is 17 percent.

Required:
(a) What is the project's year 0 net cash flow?
(Click to select) -7,722,000 -7,371,000 -6,318,000 -7,020,000 -6,669,000

(b) What is the project's year 1 net cash flow?
(Click to select) 2,840,994 3,140,046 3,289,572 2,691,468 2,990,520

(c) What is the project's year 2 net cash flow?
(Click to select) 3,140,046 2,691,468 2,990,520 3,289,572 2,840,994

(d) What is the project's year 3 net cash flow?
(Click to select) 4,036,500 4,440,150 3,834,675 4,238,325 3,632,850

(e) What is the NPV?
(Click to select) 252,931 289,808 240,887 -1,098,134 2,683,085

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