Question
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.6 million. The fixed asset will be depreciated
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.6 million. The fixed asset will be depreciated straight-line over its three-year tax life, and the fixed asset will have a market value of $290,620 at the end of the project. The project is estimated to generate $2,192,840 in annual sales, with costs of $874,305. The project requires an initial investment in net working capital of $396,231. If the tax rate is 32 percent and the required return on the project is 8 percent, what is theproject's Year 0 net cash flow?
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