Question: Quad Enterprises is considering a new three year expansion project that requires an Initial fixed asset Investment of $2.32 million. The fixed asset will be
Quad Enterprises is considering a new three year expansion project that requires an Initial fixed asset Investment of $2.32 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 $1.735 million in annual sales, with costs of $650,000. 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. The tax rate is 21 percent a. What is the project's Year O net cash flow? Year 17 Year 2? Year 3? (Do not round Intermediate calculations. Enter your answers in dollars, not millions of dollars, g. 1,234,567. A negative answer should be indicated by a minus sign.) b. If the required return is 12 percent, what is the project's NPV? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Year 0 Yeart Year 2 Year 3 NPV
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