4)

MAD Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.832 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $453,600. The project requires an initial investment in net working capital of $648,000. The project is estimated to generate $5,184,000 in annual sales, with costs of $2,073,600. The tax rate is 24 percent and the required return on the project is 11 percent.

What is the project's Year 0 net cash flow?

$-6,480,000

$-6,804,000

$-7,128,000

$-6,156,000

$-5,832,000

What is the project's Year 1 net cash flow?

$2,830,464

$2,971,987

$3,113,510

$2,688,941

$2,547,418

What is the project's Year 2 net cash flow?

$2,830,464

$2,971,987

$3,113,510

$2,688,941

$2,547,418

What is the project's Year 3 net cash flow?

$3,823,200

$4,014,360

$4,205,520

$3,632,040

$3,440,880

What is the NPV?

$1,162,727

$(1,518,244)

$4,600,505

$1,084,847

$1,220,863