3. You are bidding a project that is expected to have the following cash flow forecast. Your companies Cost of
Capital is 9% annually. Calculate the amount to carry in your estimate to cover the Cost of Interest.
Year 1
Year 2 Year 3 Year 4
Total
Revenue
$25,000
$25,000
$71,500 $5,000 $126,500
b
Expenses
$40,000 $48,000 $38,000
$0 $126,000