Question
Halloween Costumes Unlimited is considering a new 3-year store expansion project that requires an initial fixed asset investment of $4.4 million. The fixed asset falls
Halloween Costumes Unlimited is considering a new 3-year store expansion project that requires an initial fixed asset investment of $4.4 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $344,400 after 3 years. The project requires an initial investment in net working capital of $492,000. The project is estimated to generate $3,936,000 in annual sales, with costs of $1,574,400. The tax rate is 31 percent and the required return on the project is 10 percent. (Do not round your intermediate calculations.) |
Required: | |
(a) | What is the project's year 0 net cash flow? |
(Click to select) -4,647,400 -4,892,000 -1,979,919 -1,875,713 -4,402,800 |
(b) | What is the project's year 1 net cash flow? |
(Click to select) 2,188,331 2,292,538 1,875,713 1,979,919 2,084,125 |
(c) | What is the project's year 2 net cash flow? |
(Click to select) 2,124,012 2,235,802 2,188,331 1,875,713 2,347,592 |
(d) | What is the project's year 3 net cash flow? |
(Click to select) 2,795,332 2,662,221 2,188,331 2,529,110 2,395,999 |
(e) | What is the NPV? |
(Click to select) 850,595.41 718,472 10,075,024 893,125 808,066 |
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