Finance Question

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*MACRS schedule

Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.79 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. The project is estimated to generate $2,110,000 in annual sales, with costs of $805,000. The tax rate is 35 percent and the required return is 12 percent. What is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) NPV $ 38134.79 Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.55 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,030,000 in annual sales, with costs of $725,000. The tax rate is 35 percent and the required return is 15 percent. The project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $285,000 at the end of the project. What is the project's Year O net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) Cash Flow $ Years Year o Year 1 Year 2 Year 3 $ $ What is the NPV? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV $ An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,020,000 and will be sold for $1,220,000 at the end of the project. If the tax rate is 35 percent, what is the aftertax salvage value of the asset? Refer to MACRS schedule (Do not round intermediate calculations and round your answer to 2 decimal places. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) Aftertax salvage value $ Year 1 2 Property Class Three-Year Five-Year 33.33% 20.00% 44.45 32.00 14.81 19.20 7.41 11.52 11.52 5.76 Seven-Year 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 8