3 N A B C D G H 1 J 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 Asset investment 7 Estimated annual sales B Costs 9 Net working capital 10 Pretax salvage value SSSSS $ 2,900,000 $ 2,190,000 $ 815,000 $ 300,000 $ 210,000 11 Tax rate 21% 12 Project and asset life 3 13 Required return 12% 14 15 Complete the following analysis. Do not hard code values in your calculations. You must use the built-in Excel function to calculate the NPV. 16 17 18 Aftertax salvage value 19 20 Sell equipment Taxes 21 Aftertax cash flow 22 23 Sales 24 Costs 25 Depreciation Complete the following analysis. Do not hard code values in your calculations. You must use the built-in Excel function to calculate the NPV. Aftertax salvage value Sell equipment Taxes Aftertax cash flow Sales Costs Depreciation EBT Taxes Net income Capital spending Net working capital OCF Net cash flow NPV