Question
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 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 $2.9 million.
The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The tax rate is 35%. Suppose the project requires an initial investment in the net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. What are the project's Year 0 - Year 3 net cash flows? What is the new NPV?
Please do it in Excel!
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