Bygrave corp is considering a 600000 capital investment in equipment. Bygrave intends to depreciate the equipment on a straight-line basis over three years.
Assume that the equipment has no salvage value at the end of the projcts life. To support the project bygrave expects accounts receivables to increase by
75000 inventory to increase by 45000 and accounts payable to increase by 55000. the investment in net working capital will be fully recovered at the end f
the projects life. 1 . What is the projects total initial investment ( including cash flow from capital spending and changes in net working capital? 2. Bygrave forecasts incremental annual sales revenue of 900000. similarly bygrave expects total variable costs to increase by 500000 and total fixed costs
to increase by 80000. bygrave marginal tax rate is 35% what is the project annual operating cash flow ? 3. bygrave estimates that this project has a required return of 15.0% what is the projects NPV? 4. what is the projects IRR?