Question
quad enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of 2.38 million.The fixed asset qualifies for 100 percent
quad enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of 2.38 million.The fixed asset qualifies for 100 percent bonus depreciation in the first year. The project is estimated to generate 1,805,000 in annual sales, with costs of 696,000. The project requires an initial investment in net working capital of 440,000, and the fixed asset will have a market value of 465,000 at the end of the project. a. If the tax rate is 24 percent, what is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? b. If the required return is 11 percent, what is the project's NPV?
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