Floyd Clymer is the CFO of Bonavista Mustang, a manufacturer of parts for classic automobiles. Floyd is considering the purchase of a two-ton press which will allow the ﬁrm to stamp out auto
Fenders. The equipment costs $250,000. The project is expected to produce after-tax cash ﬂows of
$60,000 the ﬁrst year, and increase by $10,000 annually; the after-tax cash ﬂow in year 5 will reach
$100,000. Liquidation of the equipment will net the ﬁrm $10,000 in cash at the end of ﬁve years,
Making the total cash ﬂow in year ﬁve $110,000.
Assume the required return is 15%. What is the project's net present value?

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The Answer of Floyd Clymer is the CFO of Bonavista Mustang, a manufacturer of parts for classic automobiles. Floyd is considering the purchase of a two-ton press which will allow the ﬁrm to stamp out auto
Fenders. The equipment costs $250,000. The project is expected to produce after-tax cash ﬂows of
$60,000 the ﬁrst year, and increase by $10,000 annually; the after-tax cash ﬂow in year 5 will reach
$100,000. Liquidation of the equipment will net the ﬁrm $10,000 in cash at the end of ﬁve years,
Making the total cash ﬂow in year ﬁve $110,000.
Assume the required return is 15%. What is the project's net present value?

Floyd Clymer Is the CFO of Bonavista Mustang, a Manufacturer