revenues generated by a new fad product are forecast as follows year revenues 1 5 385476

Revenues generated by a new fad product are forecast as follows: Year Revenues 1 $52,000 2 30,000 3 20,000 4 10,000 Thereafter 0 Expenses are expected to be 50% of revenues, and working capital required in each year is expected to be 30% of revenues in the following year. The product requires an immediate investment of $54,000 in plant and equipment. a. What is the initial investment in the product? Remember working capital. Initial investment $ _________ b. If the plant and equipment are depreciated over 4 years to a salvage value of zero using straight line depreciation, and the firms tax rate is 30%, what are the project cash flows in each year? (Enter your answers in thousands of dollars. Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Cash Flow 1 $ _________ 2 _________ 3 _________ 4 ________ c. If the opportunity cost of capital is 12%, what is project NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV $ __________ d. What is project IRR? (Do not round intermediate calculations. Round your answer to 2 decimal places.) IRR ______%