Question
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment...
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Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.832 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 $453,600. The project requires an initial investment in net working capital of $648,000. The project is estimated to generate $5,184,000 in annual sales, with costs of $2,073,600. The tax rate is 25 percent and the required return on the project is 10 percent. |
| What is the project's Year 0 net 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? |
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