Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Esfandairi Enterprises is considering a new three - year expansion project that requires an initial fixed asset investment of $ 2 . 1 8 million.

Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,645000 in annual sales, with costs of $610,000. The project requires an initial investment in net working capital of 180000, and the fixed asset will have a market value of $420,000 at the end of the project.
a. If the tax rate is 21 percent, what is the projects Year 0 net cash flow? Year 1? Year 2? Year 3?(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to two decimal places, e.g.,1,234,567.89.)
b. If the required return is 12 percent, what is the project's NPV?(Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to two decimal places, e.g.,1,234,567.89.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Handbook Of Sentiment Analysis In Finance

Authors: Gautam Mitra, Xiang Yu

1st Edition

1910571571, 978-1910571576

More Books

Students also viewed these Finance questions

Question

Find the domain and range of the function. g(t) = t 4

Answered: 1 week ago