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 CALCULATING PROJECT INCREMENTAL CASH FLOWS AND NPV: Atlantic Manufacturing is considering a new investment project that will last for four years.
CALCULATING PROJECT INCREMENTAL CASH FLOWS AND NPV: Atlantic Manufacturing is considering a new investment project that will last for four years.
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CALCULATING PROJECT INCREMENTAL CASH FLOWS AND NPV: Atlantic Manufacturing is considering a new investment project that will last for four years. The delivered and installed cost of the machine needed for the project is $22252 and it will be depreciated according to the threeyear MACRS schedule. The project also requires an initial increase in net working capital of $306. Financial projections for sales and costs are in the table below. In addition, since sales are expected to fluctuate, NWC requirements will also fluctuate. The endofyear NWC requirements are included below (hint: these NWC capital requirements DO NOT represent the change in NWC for the period, they represent the endofyear balance. You must calculate the change in NWC for each period). The $0 requirement for NWC at the end of year 4 means that all NWC is recovered by the end of the project The corporate tax rate is 35% and the required return on the project is 12%.
Year  1  2  3  4 
Sales  $11901  $12569  $13475  $10523 
Costs  2115  2646  3200  1223 
NWC Requirements  337  356  227  0 
What is the incremental net income of the project for each year? (Round answers to 2 decimal places, round intermediate calculations to 5 decimal places)
What are the incremental cash flows of the project for each year? (Round answers to 2 decimal places, round intermediate calculations to 5 decimal places. When using previous answers, use the rounded answer as it was given in the answer box)
What is the project’s NPV? (Round answer to 2 decimal places, round intermediate calculations to 5 decimal places. When using previous answers, use the rounded answer as it was given in the answer box)
Net Income Year 1
Net Income Year 2
Net Income Year 3
Net Income Year 4
Cash Flow Year 0
Cash Flow Year 1
Cash Flow Year 2
Cash Flow Year 3
Cash Flow Year 4
NPV
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