Business, 13.07.2020 21:01 nicolesan3

The Freeman Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated below. The corporate tax rate is 40 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project. Year 0 Year 1 Year 2 Year 3 Year 4
Investment $37,000
Sales revenue $19,000 $19,500 $20,000 $17,000
Operating costs 4,000 4,100 4,200 3,400
Depreciation 9,250 9,250 9,250 9,250
Net working capital spending 430 480 530 430 ?

Required:
a. Compute the incremental net income of the investment for each year.
b. Compute the incremental cash flows of the investment for each year.

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The Freeman Manufacturing Company is considering a new investment. Financial projections for the inv...

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