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?
Input area:
Asset investment	$2,180,000
Estimated annual sales	$1,645,000
Costs	$610,000
Tax rate	21%
Required return	12%
Project and asset live	3
Initial investment in NWC	$250,000
Fixed asset value at end	$180,000
(Use cells A6 to B13 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.)
Output area:
Aftertax salvage value
Sell equipment
Taxes
Aftertax salvage value
	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
EBT
Taxes
Net income
Capital spending
Net working capital
OCF
Total cash flow
NPV