Question: Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.674 million. The fixed asset will be depreciated

Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.674 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $130,200. The project requires an initial investment in net working capital of $186,000. The project is estimated to generate $1,488,000 in annual sales, with costs of $595,200. The tax rate is 22 percent and the required return on the project is 14 percent. What is the project's Year O net cash flow? What is the project's Year 1 net cash flow? What is the project's Year 2 net cash flow? What is the project's Year 3 net cash flow? What is the NPV? Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.674 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $130,200. The project requires an initial investment in net working capital of $186,000. The project is estimated to generate $1,488,000 in annual sales, with costs of $595,200. The tax rate is 22 percent and the required return on the project is 14 percent. What is the project's Year O net cash flow? What is the project's Year 1 net cash flow? What is the project's Year 2 net cash flow? What is the project's Year 3 net cash flow? What is the NPV
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
