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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.85 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,130,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $350,000, and the fixed asset will have a market value of $235,000 at the end of the project. If the tax rate is 34 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? If the required return is 11 percent, what is the project's NPV?

I know Year 0 net cash flow = -320,000 and Year 1 net cash flow = 1,190,900 and I know that year 2 and year 3 are both different from Year 1.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92072454

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