Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
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Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.1 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $88,200 after 3 years. The project requires an initial investment in net working capital of $126,000. The project is estimated to generate $1,008,000 in annual sales, with costs of $403,200. The tax rate is 24 percent and the required return on the project is 16 percent. What is the project's year 0 net cash flow? What is the project's year 1 net cash flow? Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.1 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $88,200 after 3 years. The project requires an initial investment in net working capital of $126,000. The project is estimated to generate $1,008,000 in annual sales, with costs of $403,200. The tax rate is 24 percent and the required return on the project is 16 percent. What is the project's year 0 net cash flow? What is the project's year 1 net cash flow?
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Answer rating: 100% (QA)
To calculate the projects year 0 net cash flow we need to consider the initial fixed asset investmen... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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