Question
In: Finance
Halloween Costumes Unlimited is considering a new 3-year store expansion project that requires an initial fixed...
Halloween Costumes Unlimited is considering a new 3-year store expansion project that requires an initial fixed asset investment of $5.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $462,000 after 3 years. The project requires an initial investment in net working capital of $660,000. The project is estimated to generate $5,280,000 in annual sales, with costs of $2,112,000. The tax rate is 30 percent and the required return on the project is 9 percent. (Do not round your intermediate calculations.)
Required:
(a) What is the project's year 0 net cash flow?
(b) What is the project's year 1 net cash flow?
(c) What is the project's year 2 net cash flow?
(d) What is the project's year 3 net cash flow?
(e) What is the NPV?
Solutions
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