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Problem 6-4 Calculating Project Cash Flow from Assets Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset
Problem 6-4 Calculating Project Cash Flow from Assets Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.49 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,010,000 in annual sales, with costs of $705,000. The tax rate is 34 percent and the required return is 16 percent. The project requires an initial investment in net working capital of $230,000, and the fixed asset will have a market value of $295,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) Years Cash Flow Year 0 Year 1 Year 2 Year 3 $ What is the NPV? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) NPV CA
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