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Revenues generated by New Link product are forecast as follows: year 1: $40,000, year 2: $30,000,...

Revenues generated by New Link product are forecast as follows: year 1: $40,000, year 2: $30,000, year 3: $20,000, year 4: $10,000. Expenses are expected to be 40% of revenues and working capital required in each year is expected to be 20% of revenues for the following year. The product requires an immediate investment of $45,000 in plant and equipment

  1. a. What is the initial investment in the product? Remember working capital
  2. b. If the plant and equipment are depreciated to a salvage value of zero using straight line depreciation and the firm’s tax rate is 40%, what are the project cash flows in each year?
  3. c. If the opportunity cost of capital is 12%, what is project NPV, IRR, and MIRR?
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