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Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the projects Year 0 net cash flow? Year 1? Year 2? Year 3? What is the NPV?
Input area:
Asset investment	$2,180,000
Estimated annual sales	$1,645,000
Costs	$610,000
Tax rate	21%
Required return	12%
Initial investment in NWC	$250,000
Fixed asset value at end	$180,000
MACRS percentages
Year 1	0.3333
Year 2	0.4445
Year 3	0.1481
(Use cells A6 to B16 from the given information to complete this question. You must use the built-in Excel function to answer this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit.)
Output area:
	Year 0	Year 1	Year 2	Year 3
Sales
Costs
Depreciation
EBT
Taxes
Net income
Fixed asset book value
in three years
Aftertax salvage value
Sell equipment
Taxes
Aftertax salvage value
Capital spending
Net working capital
OCF
Total cash flow
NPV