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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 34 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$28,000
  Sales revenue$14,500$15,000$15,500$12,500
  Operating costs3,1003,2003,3002,500
  Depreciation7,0007,0007,0007,000
  Net working capital spending340390440340?
a.

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

Year 1Year 2Year 3Year 4
  Net income$$$$
b.

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

Year 0Year 1Year 2Year 3Year 4
  Cash flow$   $   $   $   $   
c.

Suppose the appropriate discount rate is 12 percent. What is theNPV of the project? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g.,32.16.)

  NPV$   

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