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Esfandairi Enterprises is considering a new three-vear expansion project that requires an initial fixed asset investment of \$2.18 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $1,645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1 ? Year 2? Year 3 ? What is the NPV? (Use celis A6 to B13 from the given information to complete this question. You must use the bulit-in Excel function to answer this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit.) Graded Worksheet + Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of \$2.18 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent and the required return is 12 percent. Suppose the project requires an initial investment in net working capital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1 ? Year 2? Year 3 ? What is the NPV? Input area: (Use cells A6 to B13 from the given information to complete this question. You must use the built-in Excel function to answer this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit.) 19 Output area: Aftertax salvage value Sell equipment Taxes Aftertax salvage value Year 0 Year 1 Year 2 Year 3 Sales Costs Depreciation EBT Taxes Net income Capital spending Net working capital OCF Total cash flow NPV

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