Question
quad enterprises is considering a new three year expansion project that requires an initial fixed asset investment of 229 million. the fixed asset will be
quad enterprises is considering a new three year expansion project that requires an initial fixed asset investment of 229 million. the fixed asset will be depreciated straight line to zero over its three year tax life. the project is estimated to generate $1,810,000 in annual sales, with the costs of $720,000. the project requires an initial investment in net working capital of $450,000 and the fixed asset will have a market value of $480,000 at the end of the project. a. if the tax rate is 25 percent, what is the project's year 0 net cash flow? year 1? year2? year 3? b. if he required return is 12 percent, what is the projects's NPV?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started