Question
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.134 million. The fixed asset will be depreciated
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.134 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $88,200. The project requires an initial investment in net working capital of $126,000. The project is estimated to generate $1,008,000 in annual sales, with costs of $403,200. The tax rate is 22 percent and the required return on the project is 13 percent. What is the project's Year 0 net cash flow? What is the project's Year 1 net cash flow? What is the project's Year 2 net cash flow? What is the project's Year 3 net cash flow? What is the NPV?
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