Question

Finance Is Fun is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.5 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $348,600 after 3 years. The project requires an initial investment in net working capital of $498,000. The project is estimated to generate $3,984,000 in annual sales, with costs of $1,593,600. The tax rate is 35 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?
	-1,974,772 -4,498,200 -4,998,000 -4,748,100 -1,870,837

   

(b)	What is the project's year 1 net cash flow?
	2,286,578 2,182,643 1,974,772 2,078,707 1,870,837

  

(c)	What is the project's year 2 net cash flow?
	(Click to select)2,366,5402,253,8482,141,1551,870,8372,182,643

  

(d)	What is the project's year 3 net cash flow?
	2,759,731 2,496,899 2,182,643 2,365,483 2,628,315

  

(e)	What is the NPV?
	10,259,954 793,849 835,630.87 683,995 877,412

Answer 1