Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the projects Year 0 net cash flow? Year 1? Year 2? Year 3? What is the NPV? (Excel Format)

Aftertax salvage value Sell equipment $180,000 Taxes 37,800 Aftertax salvage value $217,800 Year 0 Year 1 Year 2 Year 3 Sales $1,645,000 $1,645,000 $1,645,000 Costs $610,000 $610,000 $610,000 Depreciation 726,667 726,667 726,667 EBT $308,333 $308,333 $308,333 Taxes 64,750 64,750 64,750 Net income $243,583 $243,583 $243,583 Capital spending Net working capital OCF Total cash flow NPV