Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Quad Enterprises is considering a new 3 - year expansion project that requires an initial fixed asset investment of $ 1 . 3 million. The

Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.3 million. The fixed asset falls into the 3-year MACRS class (Year 1: 33.33%, Year 2: 44.45%, Year 3: 14.81%) and will have a market value of $100,800 after 3 years. The project requires an initial investment in net working capital of $144,000. The project is estimated to generate $1,152,000 in annual sales, with annual production costs of $460,800. The tax rate is 21 percent and the required return on the project is 14 percent.
What is the project's year 1 net cash flow?
A.637,039
B.573,335
C.605,187
D.668,891
E.700,743
What is the project's year 2 net cash flow?
A.667,397
B.573,335
C.634,027
D.700,766
E.668,891
What is the project's year 3 net cash flow?
A.830,341
B.747,307
C.788,824
D.871,858
E.668,891
What is the NPV?
A.188,802.24
B.168,202.81
C.2,922,991.04
D.198,242.35
E.179,362.13

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

Analysis for Financial Management

Authors: Robert C. Higgins

10th edition

007803468X, 978-0078034688

Students also viewed these Finance questions

Question

Sketch and label the hierarchy of needs.

Answered: 1 week ago