In: Finance
Down Under Boomerang, Inc., is considering a new three-year
expansion project that requires an initial fixed asset investment
of $2.61 million. The fixed asset will be depreciated straight-line
to zero over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $2,050,000 in
annual sales, with costs of $745,000. The project requires an
initial investment in net working capital of $270,000, and the
fixed asset will have a market value of $275,000 at the end of the
project. If the tax rate is 30 percent, what is the project’s Year
0 net cash flow? Year 1? Year 2? Year 3? (Do not round
intermediate calculations. Enter your answers in dollars, not
millions of dollars, e.g., 1,234,567. A negative answer should be
indicated by a minus sign.)
Cash Flow | |
Year 0 | $ |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
If the required return is 15 percent, what is the project's NPV?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
NPV $