LO$29.$ Calculating Project OCF Esfandairi Enterprises is considering a new three$-$year expansion project that requires an initial fixed

asset investment of $$2\mathrm{.}18$ million. The fixed asset will be depreciated straight$-$line to zero over its three$-$year tax life, after which

time it will be worthless. The project is estimated to generate $$1\mathrm{.}645$ million in annual sales, with costs of $$610,000.$ If the tax

rate is $21$ percent, what is the OCF for this project?

LO$210.$ Calculating Project NPV In the previous problem, suppose the required return on the project is $12$ percent. What is the

project's NPV$?$

LO$211.$ Calculating Project Cash Flow from Assets In the previous problem, 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 $0$ net cash flow? Year $1?$ Year $2?$ Year $3?$ What is the new NPV$?$

LO$212.$ NPV and Modified ACRS In the previous problem, suppose the fixed asset actually falls into the three$-$year MACRS class. All

$22$ the other facts are the same. What is the project's Year $1$ net cash flow now? Year $2?$ Year $3?$ What is the new NPV$?$ Page $310$

LO$213.$ NPV and Bonus Depreciation In the previous problem, suppose the fixed asset actually qualifies for $100$ percent bonus

depreciation. All the other facts are the same. What is the project's Year $1$ net cash flow now? Year $2?$ Year $3?$ What is the new

NPV$?$