Question

Fun With Finance is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.836 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will have a market value of $142,800. The project requires an initial investment in net working capital of $204,000. The project is estimated to generate $1,632,000 in annual sales, with costs of $652,800. The tax rate is 32 percent and the required return on the project is 9 percent.

  

Required:
(a)	What is the project's year 0 net cash flow?
	(Click to select)  -1,938,000  -2,142,000  -1,836,000  -2,040,000  -2,244,000

  

(b)	What is the project's year 1 net cash flow?
	(Click to select)  775,526  818,611  861,696  904,781  947,866

  

(c)	What is the project's year 2 net cash flow?
	(Click to select)  947,866  818,611  775,526  904,781  861,696

  

(d)	What is the project's year 3 net cash flow?
	(Click to select)  1,220,940  1,162,800  1,104,660  1,279,080  1,046,520

  

(e)	What is the NPV?
	(Click to select)  -389,027  392,400  345,206  817,848  373,714

Answer 1

Please rate thumbs up