Question: Alterra Inc. is considering a new three - year expansion project that requires an initial fixed asset investment of $ 1 . 2 million. The

Alterra Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $1.2 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. Alterra estimates that fixed asset will have a market value of $100,000 at the end of the project. The project is estimated to generate $1 million in annual sales, with costs of $430,000. The tax rate is 21% and the required return is 10.0%. Suppose the project requires an initial investment in net working capital of $250,000. What is the projects NPV?Some initial help was provided.Year 0Year 1Year 2Year 3Sales$1,000,000$1,100,000$1,210,000Costs$430,000$468,700$510,883Depreciation$400,000$400,000$400,000EBT$170,000$231,300$299,117Taxes$35,700$48,573$62,815Net Income$134,300$182,727$236,302OCF???Net Working Capital??Capital Spending??Total Cash Flow???

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