Summer tyme, inc. has cash available and is considering a new

Summer Tyme, Inc. has cash available and is considering a new three-year expansion project that requires an initial fixed asset investment of $3.9 million. The fixed assets will be depreciated straight-line to zero over its three-year tax life. The fixed assets will have a market value of $200,000 at the end of the project. The project is estimated to generate following revenues during those three years: $2,000,000 for year one, $2,500,000 for year two, and $3,000,000 for year three. Costs are equal to 20% of the same year sales. The project net working capital is equal to 10% of the next year’s revenue. The tax-rate is 35%. What are the project’s net cash flows for years 0-3? What is the IRR on this project?

 

Don't use plagiarized sources. Get Your Custom Essay on
Summer tyme, inc. has cash available and is considering a new
Just from $13/Page
Order Essay

 

I have an attached an image that helps with the info and requires some of the answer blanks to be filled.

Calculator

Calculate the price of your paper

Total price:$26
Our features

We've got everything to become your favourite writing service

Need a better grade?
We've got you covered.

Order your paper