****PLEASE SHOW EXCEL FORMULAS**** Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the project's Year O net cash flow? Year 1? Year 2? Year 3? What is the NPV?

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A B C D E 3 4 Input area: 5 6 Asset investment $2,180,000 7 Estimated annual sales $1,645,000 8 Costs $610,000 9 Tax rate 21% 10 Required return 12% 3 $250,000 $180,000 11 Project and asset live 12 Initial investment in NWC 13 Fixed asset value at end 14 15 (Use cells A6 to B13 from the given information to complete this question. You must use the built-in 16 Excel function to answer this question. Taxes on the salvage value should be negative for a tax 17 liability and positive for a tax credit.) 18 19 Output area: 20 21 Aftertax salvage value 22 Sell equipment 23 Taxes 24 Aftertax salvage value 25 26 27 Sales 28 Costs 29 Depreciation 30 EBT 31 Taxes 32 Net income 33 Capital spending 34 Net working capital 35 OCF 36 Total cash flow 37 NPV = Year O Year 1 Year 2 Year 3 A Graded Worksheet + FL G H | A B C D E 3 4 Input area: 5 6 Asset investment $2,180,000 7 Estimated annual sales $1,645,000 8 Costs $610,000 9 Tax rate 21% 10 Required return 12% 3 $250,000 $180,000 11 Project and asset live 12 Initial investment in NWC 13 Fixed asset value at end 14 15 (Use cells A6 to B13 from the given information to complete this question. You must use the built-in 16 Excel function to answer this question. Taxes on the salvage value should be negative for a tax 17 liability and positive for a tax credit.) 18 19 Output area: 20 21 Aftertax salvage value 22 Sell equipment 23 Taxes 24 Aftertax salvage value 25 26 27 Sales 28 Costs 29 Depreciation 30 EBT 31 Taxes 32 Net income 33 Capital spending 34 Net working capital 35 OCF 36 Total cash flow 37 NPV = Year O Year 1 Year 2 Year 3 A Graded Worksheet + FL G H |