X is considering a new three-year expansion project that requires an initial fixed asset investment of...

X is considering a new three-year expansion project that requires an initial fixed asset investment of $2.15 million. The fixed asset qualifies for 100 percent bonus depreciation. The project is estimated to generate $2.23 million in annual sales, with costs of $1.25 million. The project requires an initial investment in net working capital of $150,000, and the fixed asset will have a market value of $185,000 at the end of the project. Assume that the tax rate is 23 percent and the required return on the project is 14 percent.


a.	What is the net cash flow of the project for each year?
b.	What is the NPV of the project?

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jeff jeffy answered 1 year ago

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