Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of
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Question:
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, after which time i twill be worthless. The project is estimated to generate #2,190,000 in annual sales, with costs of $815,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV?
Asset investment $ 2,900,000
Estimated Annual Sales $ 2,190,000
Costs $ 815,000
Tax Rate 21%
Project and asset life 3
Required return 12%
Sales:
Costs:
Depreciation:
EBT:
taxes:
Net Income:
OCF:
NPV:
Answer on an excel spreadsheet with formulas explained.
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