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Quad Enterprises is considering a new 3-year expansion project that requires an Initial fixed asset Investment of $6.3 million. The fixed asset falls into
Quad Enterprises is considering a new 3-year expansion project that requires an Initial fixed asset Investment of $6.3 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) (TIP: make sure you refer to this MACRS table! The one on our PowerPoint slides may have slightly different numbers) and will have a market value of $491,400 after 3 years. The project requires an Initial Investment in net working capital of $702,000. The project is estimated to generate $5,616,000 in annual sales, with annual production costs of $2,246,400. The tax rate is 22 percent and the required return on the project is 14 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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