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Fun With Finance is considering a new 3 -year expansion project that requires an initial fixed asset investment of $2.484 million. The fixed asset will
Fun With Finance is considering a new 3 -year expansion project that requires an initial fixed asset investment of $2.484 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $193,200. The project requires an initial investment in net working capital of $276,000. The project is estimated to generate $2,208,000 in annual sales, with costs of $883,200. The tax rate is 34 percent and the required return on the project is 18 percent. Required: (a)What is the project's year 0 net cash flow? (b) What is the project's year 1 net cash flow? (c) What is the project's year 2 net cash flow? (d)What is the project's year 3 net cash flow? (e) What is the NPV
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