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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 will be depreciated
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 project's Year 0 net cash flow? Year 1 ? Year 2? Year 3 ? What ic tho NIDV? liability and positive for a tax credit.) \begin{tabular}{l} \hline Output area: \\ \hline Aftertax salvage value \\ Sell equipment \\ Taxes \\ Aftertax salvage value \\ Sales \\ Costs \\ Depreciation \\ EBT \\ Taxes \\ Net income \\ Capital spending \end{tabular}
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