In: Finance
Down Under Boomerang, Inc., is considering a new three-year
expansion project that requires an initial fixed asset investment
of $2.64 million. The fixed asset falls into the three-year MACRS
class. The project is estimated to generate $2,060,000 in annual
sales, with costs of $759,000. The project requires an initial
investment in net working capital of $280,000, and the fixed asset
will have a market value of $270,000 at the end of the
project.
If the tax rate is 35 percent, what is the project’s Year 1 net
cash flow? Year 2? Year 3? Table 8.3. (Enter your answers
in dollars, not millions of dollars. A negative answer should be
indicated by a minus sign. Do not round intermediate calculations
and round your answers to 2 decimal places, e.g.,
1,234,567.89.)
Cash Flow | |
Year 0 | $ |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
If the required return is 13 percent, what is the project's NPV?
(Enter your answer in dollars, not millions of dollars. Do
not round intermediate calculations and round your answer to 2
decimal places, e.g., 1,234,567.89.)
NPV $