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 projectthat requires an initial fixed asset investment of $2.2 million.The fixed asset falls into the 3-year MACRS class (MACRS Table) andwill have a market value of $172,200 after 3 years. The projectrequires an initial investment in net working capital of $246,000.The project is estimated to generate $1,968,000 in annual sales,with costs of $787,200. The tax rate is 22 percent and the requiredreturn on the project is 13 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?

Answer & Explanation Solved by verified expert

4.5 Ratings (789 Votes)

Initial Investment 2200000 Useful Life 3 years Depreciation Year 1 3333 2200000 Depreciation Year 1 733260 Depreciation Year 2 4445 2200000 Depreciation Year 2 977900 Depreciation Year 3 1481 2200000 Depreciation Year 3 325820 Book Value at the end of Year 3 2200000 733260 See Answer

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Quad Enterprises is considering a new 3-year expansion projectthat requires an initial fixed asset investment of $2.2 million.The fixed asset falls into the 3-year MACRS class (MACRS Table) andwill have a market value of $172,200 after 3 years. The projectrequires an initial investment in net working capital of $246,000.The project is estimated to generate $1,968,000 in annual sales,with costs of $787,200. The tax rate is 22 percent and the requiredreturn on the project is 13 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?