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Evaluation of project proposal

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You are in the finance department of a firm and you are evaluation a project proposal. You have the developed the following financial projections and you are calculating:

a. The incremental cash flows of the project.
b. The net present value of the project given a discount rate of 15%.

The corporate tax rate is 34% and the financial projections are in thousands.

year 0 year 1 year 2 year 3 year 4 year 5
Sales revenue 10,000 10,000 10,000 10,000 10,000
Operating costs 3,000 3,000 3,000 3,000 3,000
Investment 17,500
Depreciation 3,500 3,500 3,500 3,500 3,500
Net working capital 300 350 400 300 200 0

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This shows the steps to evaluate a project proposal

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The corporate tax rate is 34% and the financial projections are in thousands.

year 0 year 1 year 2 year 3 year 4 year 5
Sales revenue 10,000 10,000 10,000 10,000 10,000
Less Operating ...

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