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quad enterprises is considering a new three year expansion project that requires an initial fixed asset...

quad enterprises is considering a new three year expansion project that requires an initial fixed asset investment of 229 million. the fixed asset will be depreciated straight line to zero over its three year tax life. the project is estimated to generate $1,810,000 in annual sales, with the costs of $720,000. the project requires an initial investment in net working capital of $450,000 and the fixed asset will have a market value of $480,000 at the end of the project. a. if the tax rate is 25 percent, what is the project's year 0 net cash flow? year 1? year2? year 3? b. if he required return is 12 percent, what is the projects's NPV?

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Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I THINK THE INITIAL INVESTMENT = 2.29 MILLION AND NOT 229 MILLION. THERE IS A MISTAKE IN WRITING. IF I AM WRONG, PLEASE CORRECT, WILL REVISE SOLUTION

jeff jeffy answered 1 year ago
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