The Best Manufacturing Company Is Considering

The Best 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, andall cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0Year 1Year 2Year 3Year 4Investment$24,000—-Sales Revenue-$12,500$13,000$13,500$10,500Operating Costs-2,7002,8002,9002,100Depreciation-6,0006,0006,0006,000Net Working Capital(end of year)300350400300?-a. Compute the incremental net income of the investment in each year. b. Compute the incremental cash flows of the investment in each year. c. Suppose the appropriate discount rate is 12 percent. What is the NPV of the project?

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