Purchase Solution

Project Evaluation

Not what you're looking for?

Ask Custom Question

Revenues generated by a new fad product are forecast as follows:

Year 1 : 40,000
Year 2: 30,000
Year 3: 20,000
Year 4: 10,000
Thereafter: 0

Expenses are expected to be 40 percent of revenues, and working capital required in each year
is expected to be 20 percent of revenues in the following year. The product requires an immediate
investment of $45,000 in plant and equipment.

What is the initial investment in the product? Remember working capital.
b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using
straight-line depreciation, and the firm's tax rate is 40 percent, what are the project cash
flows in each year?
c. If the opportunity cost of capital is 12 percent, what is project NPV?
d. What is project IRR?

Purchase this Solution

Purchase this Solution

Free BrainMass Quizzes
Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.


This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Learning Lean

This quiz will help you understand the basic concepts of Lean.