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Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.40 million. The fixed asset will
Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.40 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $1,980,000 in annual sales, with costs of $675,000. The tax rate is 34 percent and the required return is 18 percent. The project requires an initial investment in net working capital of $200,000, and the fixed asset will have a market value of $310,000 at the end of the project. What is the project's Year O net cash flow? Year 1? Year 2? Year 3? (Do not round Intermediate calculations. A negative answer should be indicated by a minus sign.) Cash Flow Years Year o Year 1 Year 2 Year 3 What is the NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $
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