You are evaluating a project for XYZ Inc. You estimate the sales price to be...
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You are evaluating a project for XYZ Inc. You estimate the sales price to be $400 per unit and sales volume to be 1,000 units in year 1, 1,250 units in year 2, and 1,325 units in year 3. The project has a three year life. Variable costs amount to $225 per unit and fixed costs are $ 100,000 per year. The project requires an initial investment of $165,000 which is depreciated straight line to zero over the three year project life. The actual market value of the initial investment at the end of year 3 is $35.000. Initial net working capital investment is $90,000. The increase in net working capital will revert back to normal at the end of the project's life. The tax rate is 34% and the required return on the project is 12%. 2-What is the cash flow for the project in year 2? A) $26,400 B) $68,200 C$97,075 D) $101,210 E) $105,738
2-What is the cash flow for the project in year 2?
A) $26,400
B) $68,200
C$97,075
D) $101,210
E) $105,738
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