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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
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. 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 project's Year O net cash flow? Year 1? Year 2? Year 3? What is the NPV? Input area: Asset investment $2,180,000 Estimated annual sales $1,645,000 Costs $610,000 Tax rate 21% Required return 12% Initial investment in NWC $250,000 $180,000 Fixed asset value at end MACRS percentages Year 1 Year 2 Year 3 0.3333 0.4445 0.1481 (Use cells A6 to B16 from the given information to complete this question. You must use the built-in Excel function to answer this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit +
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