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A project requires an initial investment of $300k.
A project requires an initial investment of $300k. Working capital is anticipated to be variable at 10% of revenues; the working capital investment must be made at the beginning of each period and will be recaptured in full at the end of year 4. The tax rate is 40%.
Rev Yr 1= $120k Yr 2 = $140k Yr 3 = $160k Yr 4 = $180k
Cost of goods sold Yr 1 = $36k Yr 2 = $42k Yr 3 = $48k Yr 4 = $54k
Depreciation Yr 1 = $80k Yr 2 = $60k Yr 3 = $40k Yr 4 = $20k
EBIT Yr 1 = $4k Yr 2 = $38k Yr 3 = $72k Yr 4 = $106k
What is the initial cash outlay?