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, after which time it will be worthless. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The project requires an initial investment in networking 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 projects NPV? (Please show excel calculation)

 

 

Asset investment Estimated annual sales Costs Net working capital Pretax salvage value Tax rate Project and asset life Required return $ LA CASA SS $ $ $ $ 2,900,000 2,190,000 815,000 300,000 210,000 21% 3 12%