Question

In: Finance

Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...

Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.402 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 $264,600. The project requires an initial investment in net working capital of $378,000. The project is estimated to generate $3,024,000 in annual sales, with costs of $1,209,600. The tax rate is 25 percent and the required return on the project is 11 percent.

What is the project's Year 0 cash flow?

What is the project's Year 1 net cash flow?

What is the project's Year 2 net cash flow?
What is the project's Year 3 net cash flow?
What is the NPV?

Solutions

Expert Solution

Calculate the NPV as follows:

Formulas:


Related Solutions

Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.0 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $310,800 after 3 years. The project requires an initial investment in net working capital of $444,000. The project is estimated to generate $3,552,000 in annual sales, with costs of $1,420,800. The tax rate is 22 percent and the required return on the project...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.944 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 $151,200. The project requires an initial investment in net working capital of $216,000. The project is estimated to generate $1,728,000 in annual sales, with costs of $691,200. The tax rate is 22 percent and the required return...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.2 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $247,800 after 3 years. The project requires an initial investment in net working capital of $354,000. The project is estimated to generate $2,832,000 in annual sales, with costs of $1,132,800. The tax rate is 22 percent and the required return on the project...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.59 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 $357,000. The project requires an initial investment in net working capital of $510,000. The project is estimated to generate $4,080,000 in annual sales, with costs of $1,632,000. The tax rate is 22 percent and the required return...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.1 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $315,000 after 3 years. The project requires an initial investment in net working capital of $450,000. The project is estimated to generate $3,600,000 in annual sales, with costs of $1,440,000. The tax rate is 22 percent and the required return on the project...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.13 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 $399,000. The project requires an initial investment in net working capital of $570,000. The project is estimated to generate $4,560,000 in annual sales, with costs of $1,824,000. The tax rate is 25 percent and the required return...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.16 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 $168,000. The project requires an initial investment in net working capital of $240,000. The project is estimated to generate $1,920,000 in annual sales, with costs of $768,000. The tax rate is 22 percent and the required return...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $4.536 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 $352,800. The project requires an initial investment in net working capital of $504,000. The project is estimated to generate $4,032,000 in annual sales, with costs of $1,612,800. The tax rate is 22 percent and the required return...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.97 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 $231,000. The project requires an initial investment in net working capital of $330,000. The project is estimated to generate $2,640,000 in annual sales, with costs of $1,056,000. The tax rate is 24 percent and the required return...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $3.564 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 $277,200. The project requires an initial investment in net working capital of $396,000. The project is estimated to generate $3,168,000 in annual sales, with costs of $1,267,200. The tax rate is 24 percent and the required return...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT