Ch$.9$: Project NPV

Alterra Inc. is considering a new three$-$year expansion project that requires an initial fixed asset investment of $$1\mathrm{.}2$ million. The fixed asset will be depreciated straight$-$line to zero over its three$-$year tax life. Alterra estimates that fixed asset will have a market value of $$100,000$ at the end of the project. The project is estimated to initially generate $$1$ million in annual sales increasing at a rate of $10\%$ per year. Project costs are estimated to start at $$430,000$ increasing at a rate of $9\%$ per year. The tax rate is $21$ percent and the required return is $9\mathrm{.}4$ percent. Suppose the project requires an initial investment in net working capital of $$250,000.$ What is the project's NPV$?$

Some initial help was provided.

$\backslash$table$[[\backslash$table$[[$initial fixed asset$],[$investment$]],$$$1,200,000,,,],[\backslash$table$[[$Fixed asset MV in$],[$year $3]],$$$100,000,,,],[$Tax Rate,$21\%,,,],[\backslash$table$[[$Initial Net Working$],[$Capital cost$]],$$$250,000,,,],[\backslash$table$[[$required rate of$],[$return$]],9\mathrm{.}4\%,,,],[,,,,],[,$Year $0,,,],[$Sales$,,$$$1,000,000,$$$1,100,000,$$$1,210,00$