The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 34 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

a. Compute the incremental net income of the investment for each year. (Do not round intermediate calculations.)
b. Compute the incremental cash flows of the investment for each year. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
c. Suppose the appropriate discount rate is 13 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Statement showing net income of the investment for each year,cash flows of the investment for each year and NPV
Ans  Particulars  0  1  2  3  4  NPV 
Investment  41000  
Net working capital  470  
Sales revenue  21000  21500  22000  19000  
Less  
Operating cost  4400  4500  4600  3800  
Depeciation  10250  10250  10250  10250  
PBT  6350  6750  7150  4950  
Tax @ 34%  2159  2295  2431  1683  
a  PAT/Net income  4191  4455  4719  3267  
Add: depreciation  10250  10250  10250  10250  
Annaul cash flow  14441  14705  14969  13517  
Changes in WC  520  570  470  2030  
b  Total cash flow  41470  13921  14135  14499  15547  
PVIF @ 13%  1  0.8850  0.7831  0.6931  0.6133  
c  Present value  41470.00  12319.47  11069.78  10048.53  9535.27  1503.05 
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