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Fun With Finance is considering a new 3-year expansion project that requires an initial fixed asset...

Fun With Finance is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.616 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 $436,800. The project requires an initial investment in net working capital of $624,000. The project is estimated to generate $4,992,000 in annual sales, with costs of $1,996,800. The tax rate is 31 percent and the required return on the project is 17 percent.

  

(a) What is the project's year 0 net cash flow?

-6,552,000

-6,864,000

-5,928,000

-5,616,000

-6,240,000

  

(b) What is the project's year 1 net cash flow?

(Click to select)

2,647,008

2,911,709

2,382,307

2,514,658

2,779,358

  

(c) What is the project's year 2 net cash flow?

2,779,358

2,514,658

2,647,008

2,382,307

2,911,709

  

(d) What is the project's year 3 net cash flow?

3,572,400

3,215,160

3,929,640

3,393,780

3,751,020

  

  

(e) What is the NPV?

-1,014,897

2,395,823

232,789

186,577

195,905

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