Question
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 !!
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