This is try 4 to get the correct answer to this problem. I have answered year 0

Question

This is try 4 to get the correct answer to this problem. I have answered year 0 which is -285000 and year 2 which is 129825.00 I need to know what I am doing wrong to get year 1 and year 3 please if you are not sure please do not try and answer this problem because I am running out of my allotted questions. Thank you for your help

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $480 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $265 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $189,000 in assets, which will be depreciated straight-line to zero over the 3-year project life. The actual market value of these assets at the end of year 3 is expected to be $43,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 30 percent and the required return on the project is 12 percent.

(Use SL depreciation table) What will the cash flows for this project be?

please let me know if you cannot see the SL table thank you. Again question 0 and 2 are correct if this helps

Explanation / Answer

Notes:

Year Initial Investment Sales NWC Variable Cost Fixed Cost Depreciation Profit/loss before Tax Tax@30% Profit/loss after Tax Depreciation Cash Flow PV Factor @12% PV of Cash Flow 0 (189000) (96000) (285000) 1 (285000) 1 480000 (24000) (265000) (100000) (37800) 53200 (15960) 37240 37800 75040 0.893 67010.72 2 600000 (7200) (331250) (100000) (75600) 85950 (25785) 60165 75600 135765 0.797 108204.705 3 679000 - (351125) (100000) (75600) 152275 (45682.5) 106592.5 75600 182192.5 0.712 129721.06 NPV $19936.485

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