Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...
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Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the project's Year O net cash flow? Year 1? Year 2? Year 3? What is the NPV? Input area: Asset investment Estimated annual sales Costs Tax rate Required return Initial investment in NWC Fixed asset value at end MACRS percentages Year 1 Year 2 Year 3 $2,180,000 $1,645,000 $610,000 21% 12% $250,000 $180,000 0.3333 0.4445 0.1481 Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the project's Year O net cash flow? Year 1? Year 2? Year 3? What is the NPV? Input area: Asset investment Estimated annual sales Costs Tax rate Required return Initial investment in NWC Fixed asset value at end MACRS percentages Year 1 Year 2 Year 3 $2,180,000 $1,645,000 $610,000 21% 12% $250,000 $180,000 0.3333 0.4445 0.1481
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Answer to Question 1 Initial Investment 2180000 Useful Life 3 years Depreciation Year 1 3333 2180000 ... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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