Ch$.9$: Project NPV

Big Question Inc. is considering a new three$-$year expansion project that requires an initial fixed asset investment of $$1\mathrm{.}2$ million. The fixed asset will be depreciated straight$-$line to zero over its three$-$year tax life. The project is estimated to generate $$1$ million in annual sales, with costs of $$430,000.$ The tax rate is $21$ percent and the required return is $10\%$ percent. Suppose the project requires an initial investment in net working capital of $$250,000,$ and the fixed asset will have no salvage value at the end of the project. What is the project$$s NPV$?$

Some initial help was provided.

Use the below table if you wish to copy the data into Excel.

Initial Investment $$1,200,000$

Net Working Capital $$250,000$

tax rate $21\%$

required rate of return $10\%$

Year $0$ Year $1$ Year $2$ Year $3$

Sales $$1,000,000$ $$1,000,000$ $$1,000,000$

Costs $$430,000$ $$430,000$ $$430,000$

Depreciation $$400,000$ $$400,000$ $$400,000$

EBT $$170,000$ $$170,000$ $$170,000$

Taxes $$35,700$ $$35,700$ $$35,700$

Net Income $$134,300$ $$134,300$ $$134,300$

OCF $???$

Net Working Capital $??$

Capital Investments $??$

Total Cash Flow $????$

Do not round intermediate steps.

Group of answer choices

$$38,474\mathrm{.}62$

$$60,868\mathrm{.}37$

$$66,553\mathrm{.}72$

$$44,021\mathrm{.}48$

$$46,807\mathrm{.}72$

$$78,030\mathrm{.}75$