Calculating Project NPV; Considering a a new three year expansion project that requires an initial fixed asset investment of $1.65million. The fixed asset will be depreciated straightline to zero over its three year tax life adfter which it will be worthless. The project is estimated to generate $1.24million in annual sales, with costs of $485,000. The tax rate is 35% and the required return is 12%. What is the NPV?

Calculating project cashflow from assets; iN THE PREVIOUS PROBLEM SUPPOSE THE PROJECT REQUIRES AN INITITIAL INVESTMENT IN NET WORKING CAPITAL OF $285,000, AND THE FIXED ASSET WILL HAVE A MARKET VALUE OF $225,000 AT THE END OF THE PROJECT. WHAT IS THE PROJECTS YEAR 0NET CASHFLOW? YEAR1, YEAR2, YEAR3 WHAT IS THE NEW NPV?

PROJECT EVALUATION; Your firm is contemplating the purchase of a new $530,000 computerbased order entry system. The system will be depreciated straighline to zeroover its five year life. It will be worth $50,000 at the end of that time. You will save $186,000 beofre taxes per year in order processing cost, and you will be able to reduce working capital by $85,000 ( this is a one time reduction). If the tax rate is 35%, What is the IRR for this project