Problem $6-4$ Calculating Project Cash Flow from Assets

Down Under Boomerang, Inc., is considering a new $3-$year expansion project that

requires an initial fixed asset investment of $$2\mathrm{.}28$ million. The fixed asset will be

depreclated straight$-$line to zero over its $3-$year tax life. The project is estimated to

generate $$1,750,000$ in annual sales, with costs of $$660,000.$ The project requires an

nitlal Investment in net working capital of $$330,000,$ and the fixed asset will have a

market value of $$300,000$ at the end of the project.

If the tax rate is $23$ percent, what is the project's Year $0$ net cash flow? Year $1?$ Year $2?$

Year $3?($Do not round Intermedlate calculatlons and enter your answers in dollars,

not millions of dollars, e$.$g$.,1,234,567.$ A negatlve answer should be Indlcated by a

minus sign.$)$

b$.$ If the required return is $12$ percent, what is the project's NPV$?($Do not round

Intermedlate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$