Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Good morning- I am trying to solve this problem and I get lost toward the end and could use some help. Quad Enterprises is considering

Good morning- I am trying to solve this problem and I get lost toward the end and could use some help.

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.76 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,100,000 in annual sales, with costs of $795,000. The project requires an initial investment in net working capital of $320,000, and the fixed asset will have a market value of $220,000 at the end of the project. If the tax rate is 34 percent, what is the project's Year 0 net cash flow? Year 1? Year 2? Year 3?(Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g. 1,234,567. Negative amounts should be indicated by a minus sign.)

I can solve for the OCF =1,174,100

I can solve for the cash flows as well

Yr0= -3,080,000

Yr1= 1,174,100

Yr2= 1,174,100

Yr3= 1,639,300

Then the question asks for: If the required Rate of return is 12% what is the projects NPV and this is where I get lost. Can anyone help ?

Thanks !!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Business The Challenges Of Globalization

Authors: John J. Wild, Kenneth L. Wild

9th Edition

0134729226, 978-0134729220

More Books

Students also viewed these Finance questions

Question

Explain how Eulers method works.

Answered: 1 week ago

Question

What are the attributes of a technical decision?

Answered: 1 week ago