Question
Halloween Costumes Unlimited is considering a new 3-year store expansion project that requires an initial fixed asset investment of $4.5 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 $4.5 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $348,600 after 3 years. The project requires an initial investment in net working capital of $498,000. The project is estimated to generate $3,984,000 in annual sales, with costs of $1,593,600. The tax rate is 32 percent and the required return on the project is 15 percent.
What is the project's year 0 net cash flow?
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