Question 8 Charcoal Mining is considering a new three-year expansion project that requires an initial fixed asset investment of $1.4 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. The project is estimated to generate $1,120,000 in annual sales, with costs of $480,000. The tax rate is 35 percent and the required return is 12 percent. What is the projects NPV?

Question 9 In Question 8, suppose the project requires an initial investment in net working capital of $285,000, which will be discharged at the end of the projects life. Further, the fixed asset will have a market value of $225,000 at the end of the project and will be sold. What is the projects Year 0 net cash flow? Year 1? Year 2? Year 3? What is the new NPV?

Question 10 In Question 9, suppose the fixed asset actually falls into the three-year MACRS class. All the other facts are the same (e.g., the fixed asset is still sold at the end of Year 3). What is the projects Year 1 net cash flow now? Year 2? Year 3? What is the new NPV?