Question: I need some help with solving this problem. PEC Inc is evaluating a 3 year expansion. The initial fixed asset investment is $3 million. FA
I need some help with solving this problem.
PEC Inc is evaluating a 3 year expansion. The initial fixed asset investment is $3 million.
FA will be three year MACRS.
Projected sales are $2,180,000 annual, with costs of $855,000.
Project requires an initial investment of $400,000 in net working capital.
Fixed assets will have market value of $260,000 at the end of the project.
Tax rate will be 30 %.
Need to determine projects cash flow for each year from Yr 0 through Yr 3, and the npv if the required return is 9%.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
