Business
Business, 18.08.2021 01:20, 2Pallie2

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset falls into the three-year MACRS class (MACRS schedule). The project is estimated to generate $1,790,000 in annual sales, with costs of $684,000. The project requires an initial investment in net working capital of $410,000, and the fixed asset will have a market value of $420,000 at the end of the project. Required:
a. If the tax rate is 21 percent, what is the project's Year 0 net cash flow? Year 1? Year 2? Year 3?
b. If the required return is 12 percent, what is the project's NPV?

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