ANSWER WITH FORMULAS

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? \begin{tabular}{|l|l|l|l|l|} \hline & A B & \multicolumn{1}{|c|}{ C } \\ \hline 16 & & Complete the following analysis. Do not hard code values in your calculations. You must \\ \hline 17 & & Use the built-in Excel function to calculate the NPV. \\ \hline 18 & & Aftertax salvage value \\ \hline 19 & & Sell equipment \\ \hline 20 & & Taxes \\ \hline 21 & & Aftertax cash flow \\ \hline 22 & & \\ \hline 23 & & Sales \\ \hline 24 & & Costs \\ \hline 25 & & Depreciation \\ \hline 26 & & EBT \\ \hline 27 & & Taxes \\ \hline 28 & & Net income \\ \hline 29 & & \\ \hline 30 & & Capital spending \\ \hline 31 & & Net working capital \\ \hline 32 & & OCF \\ \hline 33 & & Net cash flow \\ \hline 34 & & \\ \hline 35 & & NPV \\ \hline 36 & & \\ \hline 37 & & \\ \hline \end{tabular}