Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Esfandairl Enterprises is considering a new three-year expansion project that requires an Initlal fixed asset Investment of $2.37 million. The fixed asset falls Into the
Esfandairl Enterprises is considering a new three-year expansion project that requires an Initlal fixed asset Investment of $2.37 million. The fixed asset falls Into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,765,000 in annual sales, with costs of $664,000. The project requires an initlal investment in net working capital of $360,000, and the fixed asset will have a market value of $345,000 at the end of the project. a. If the tax rate is 21 percent, what is the project's Year 0 net cash flow? Year 1 ? Year 2 ? Year 3? (A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and enter your answers in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.) b. If the required return is 11 percent, what is the project's NPV? (Do not round Intermedlate calculations and enter your answer In dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started