3 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 on a three-year MACRS schedule. 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 7 A A A A A Asset investment Estimated annual sales $ 8 Costs 9 Net working capital 10 Pretax salvage value 11 Tax rate 12 | Project and asset life 13 Required return 14 MACRS percentages 15 Year 1 16 Year 2 17 Year 3 2,900,000 2,190,000 815,000 300,000 210,000 21% 3 12% 0.3333 0.4445 0.1481 18 $ 2,190,000.00 815,000.00 Sales Costs Depreciation EBT Taxes Net income Fixed asset book value in three years Aftertax salvage value Sell equipment AE D F G H Taxes Aftertax cash flow Capital spending Net working capital OCF Net cash flow NPV