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Business, 04.12.2020 23:30 tovarclaudia055

Jasper Metals is considering installing a new molding machine which is expected to produce operating cash flows of $56,000 per year for 7 years. At the beginning of the project, inventory will decrease by $16,800, accounts receivables will increase by $21,400, and accounts payable will increase by $15,300. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $252,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project creating an aftertax cash flow of $50,000. What is the net present value of this project given a required return of 10.1 percent?

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