A+ SOLUTION financial management unit 4 project - 78056

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Initial investment:
The initial investment (I) is the sum of the invest in plant and equipment.
I = $1,000,000

-Working Capital:
The additional net investment in inventory and receivables is the
working capital needed for the project:
WC = $200,000
There is no additional info about the WC, so we can assume that it
will not change over the project's life. Then Working Capital Change
for each year Yi is:

ChWCi = Previous Year WC - Current WC = 0 (for i=1 to 7)
and
ChWC0 = -$200,000
The working capital is recovered, this means that for the end of the
year 8 it will be zero or:
ChWC8 = $200,000

-Depreciation:
For the first five years Yi (i = 1 to 5):
Di = (Invest in plant and equipment)/5 = $1,000,000/5 = $200,000
For the years 6 to 8 the depreciation will be zero.

-Revenues:
For the first year the expected revenues will be:
R1 = $950,000
For the years Yi (i=2 t

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