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 $4.968 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 $386,400. The project requires an initial investment in net working capital of $552,000. The project is estimated to generate $4,416,000 in annual sales, with costs of $1,766,400. The tax rate is 24 percent and the required return on the project is 11 percent. |
what is projects year 0 net cashflow?
whats projects year 1 net cashflow?
whats projects year 2 net cashflow?
whats projects year 3 net cashflow?
what is npv?
Solutions
Expert Solution
| Particulars | Year 0 | Year 1 | Year 2 | Year 3 |
| Annual sales | - | 4,416,000 | 4,416,000 | 4,416,000 |
| Less: Costs | - | 1,766,400 | 1,766,400 | 1,766,400 |
| Less: Depreciation | - | 1,656,000 | 1,656,000 | 1,656,000 |
| Earnings before tax | - | 993,600 | 993,600 | 993,600 |
| Less: Taxes at 24% | - | 238,464 | 238,464 | 238,464 |
| Net Income | - | 755,136 | 755,136 | 755,136 |
| Add back Depreciation | - | 1,656,000 | 1,656,000 | 1,656,000 |
| Cash flow form operations | - | 2,411,136 | 2,411,136 | 2,411,136 |
| Initail investment in asset | -$4,968,000 | - | - | - |
| Net working capital | -$552,000 | - | - | 552,000 |
| After tax market value of asset | - | - | - | 293,664 |
| Net cash flow | -$5,520,000 | 2,411,136 | 2,411,136 | 3,256,800 |
| Required return | 11% | |||
| NPV | 990,470.75 |
Excel formulas:
jeff jeffy answered 1 year agoRelated 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
Latest Questions
- 1. A submarine (sub A) travels through water at a speed of 8.00 m/s, emitting a...
- physician-assisted suicide and contrasted it with euthanasia. Do you agree with either of them? Where do...
- (Break-even point and operating leverage) Footwear Inc. manufactures a complete line of men's and women's dress...
- one of the characteristics of intellectual development is developing and understanding of personal abilities. a)Discuss this...
- in C++ For this program, you are going to implement a stack using an array and...
- Argue the ethical dilemma raised by data brokers, based on an ethical theory of your choice.
- In python of Jupiter notebook Write a python function called trng that takes three numbers x,...
ADVERTISEMENT