Question: Please show your steps to get the answer so that I may fully understand Down Under Boomerang, Inc., is considering a new three-year expansion project


Please show your steps to get the answer so that I may fully understand
Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.49 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,010,000 in annual sales, with costs of $719,000. The project requires an initial investment in net working capital of $230,000, and the fixed asset will have a market value of $295,000 at the end of the project. a. If the tax rate is 22 percent, what is the project's Year 1 net cash flow? Year 2? Year 3? Table 8.3. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b. If the required return is 16 percent, what is the project's NPV? (Enter your answer in dollars, not millions of dollars. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 1,234,567.89.) TABLE 8.3 Depreciation under Modified Accelerated Cost Recovery System (MACRS) RECOVERY PERIOD CLASS 5 YEARS 7 YEARS 10 YEARS YEAR 3 YEARS 15 YEARS 20 YEARS 1 2 3333 4445 .1481 .0741 3 .2000 .3200 .1920 .1152 .1152 .0576 4 .1429 2449 .1749 .1249 .0893 .0892 .0893 .0446 5 6 1000 1800 .1440 .1152 ,0922 .0737 .0655 .0655 .0656 55 .0328 7 8 .0500 .0950 .0855 .0770 .0693 .0623 .0590 .0590 .0591 .0590 .0591 .0590 .0591 .0590 ,0591 .0295 9 10 11 .03750 .07219 .06677 .06177 .05713 .05285 .04888 .04522 .04462 .04461 .04462 .04461 .04462 .04461 .04462 .04461 .04462 .04461 .04462 .04461 .02231 12 13 14 15 16 17 18 19 20 21
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