Problem 10-11 Calculating Project Cash Flow from Assets. 12 XI B 5 Calculating NPV - Excel ? 6 X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In 1 points Calibri 11 I Paste A- Alignment Number Cells Editing Conditional Format as Cell Formatting Table Styles Styles Clipboard Font eBook A1 X B C D E F G H Print References Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. What is the project's Year O net cash flow? Year 1? Year 2? Year 3? The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 6 8 9 Asset investment Estimated annual sales Costs Net working capital Pretax salvage value Tax rate Project and asset life Required return $ $ $ $ $ 2,900,000 2,190,000 815,000 300,000 210,000 21% 3 12% 10 11 12 13 14 Problem 10-11 Calculating Project Cash Flow from Assets. 12 XB5 Calculating NPV - Excel ? 6 X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Calibri 11 AA E M 1 points Paste BIU- Cells Editing Alignment Number Conditional Format as Cell Formatting Table Styles Styles Clipboard Font A eBook A1 x f A B D E F G H 17 Print 18 19 $ 210,000 . Aftertax salvage value Sell equipment Taxes Aftertax cash flow 20 References 21 22 23 $ 24 25 Sales Costs Depreciation EBT Taxes Net income 2,190,000 $ 815,000 966,667 408,333 $ 85,750 322,583 $ 2,190,000 $ 815,000 966,667 408,333 $ 85,750 322,583 $ 2,190,000 815,000 966,667 408,333 85,750 322,583 26 $ 27 28 $ 29 30 $ Capital spending Net working capital OCF Net cash flow (2,900,000) (300,000) 31 32 $ 1,289,250 $ 1,289,250 $ 33 34 (3,200,000) NPV 35 36