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The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated...

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Finance

The Best Manufacturing Company is considering a new investment.Financial projections for the investment are tabulated here. Thecorporate tax rate is 24 percent. Assume all sales revenue isreceived in cash, all operating costs and income taxes are paid incash, and all cash flows occur at the end of the year. All networking capital is recovered at the end of the project.

Year 0Year 1Year 2Year 3Year 4
  Investment$27,700
  Sales revenue$14,800$16,400$17,800$14,300
  Operating costs3,6003,4505,6004,200
  Depreciation6,9256,9256,9256,925
  Net working capital spending370270365220?
a.

Compute the incremental net income of the investment for eachyear. (Do not round intermediatecalculations.)


   


b.

Compute the incremental cash flows of the investment for eachyear. (Do not round intermediate calculations.A negative amount should be indicated by a minussign.)


   


c.

Suppose the appropriate discount rate is 10 percent. What is theNPV of the project? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g.,32.16.)


   

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