One tutor wanted more information but this is the exact question I was given on

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One tutor wanted more information but this is the exact question I was given on my assignment. I got no more information. Can anyone figure it out????

Southern Industrials is analyzing a project with a projected annual sales of $189,400 and costs of $102,300 and requiring an investment of $15,000 in inventory, $28,000 in receivables and $#6,000 in payables(use NWC) . Fixed assets are $80,000 and belong to a 30% CCA class. Interest is $11,000 annually. Project life is 3 years and at the end, the equipment is expected to have a market value of $26,000. Cost of the capital is 14% and tax rate is 34%. Using the Grid overleaf as a guide, complete the “Pro-Forma” income statement and calculate the NPV to determine if this project should go ahead. Asset pool will not be continuing.

Explanation / Answer

Income statement Annual sales 189,400 Costs -102,300 contribution 87,100 interest -11000 Depreciation     (24,000) Profit before tax 52,100 Tax 34%` -17,714 Profit after tax 34,386 Add: deprecation 24,000 Cashflow in year 1 58,386 Initial investment Inventory        15,000 receivables        28,000 payable          6,000        49,000 Fixed assets        80,000 total outflow     129,000 salvage value        26,000 Year                 -   1 2 3 NPV outflow (129,000) inflow    58,386    58,386    58,386 Salvage value    26,000 Total cashflow (129,000)    58,386    58,386    84,386 PV factor                  1 0.8772 0.7695 0.6750 Pv of cashflow (129,000)    51,216    44,926    56,958    24,100

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