Question
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.6 million. The fixed asset falls into the
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.6 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $201,600 after 3 years. The project requires an initial investment in net working capital of $288,000. The project is estimated to generate $2,304,000 in annual sales, with costs of $921,600. The tax rate is 23 percent and the required return on the project is 9 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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