XDA 5 Calculating NPV - Excel ? Q FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Ruler Formula Bar QE 2 Gridlines Headings Normal Page Break Page Custom Preview Layout Views Workbook Views Zoom 100% Zoom to Window Macros Selection Show Zoom Macros D19 X fx B D E F G H 1 2 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. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 4 5 6 $ $ 7 8 A A A A A 9 Asset investment Estimated annual sales Costs Net working capital Pretax salvage value Tax rate Project and asset life Required return $ 2,900,000 2,190,000 815,000 300,000 210,000 21% 3 12% 10 11 12 13 14 H5 Calculating NPV - Excel ? El - Q FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Ruler Formula Bar FO Gridlines Headings Window Macros Normal Page Break Page Custom Preview Layout Views Workbook Views Zoom 100% Zoom to Selection Zoom Show Macros D19 V B D E F G H 18 19 Aftertax salvage value Sell equipment Taxes Aftertax cash flow 20 21 22 23 24 25 26 27 28 29 30 31 Sales Costs Depreciation EBT Taxes Net income Capital spending Net working capital OCF Net cash flow 32 33 34 35 NPV 36 37 38 20