Esfandairi Enterprises is considering a new three-year expansion project that requires an

initial fixed asset investment of $2.28 million. The fixed asset will be depreciated

straight-line to zero over its three-vear tax life The project is estimated to generate

$1,750.000 in annual sales, with costs of $660.000. The project requires an initial

investment in net working capital of $330.000 and the fixed asset will have a market

value of $300.000 at the end of the project.

A.) If the tax rate is 23 percent, what is the project's Year O net cash flow? Year 1? Year 23

Year 3?

B.) If the required return is 12

percent. what is the projects

NPV3