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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment...

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Finance

Quad Enterprises is considering a new three-year expansionproject that requires an initial fixed asset investment of $2.58million. The fixed asset falls into the three-year MACRS class. Theproject is estimated to generate $2,040,000 in annual sales, withcosts of $743,000. The project requires an initial investment innet working capital of $260,000, and the fixed asset will have amarket value of $280,000 at the end of the project.

  

If the tax rate is 34 percent, what is the project’s Year 0 netcash flow? Year 1? Year 2? Year 3? (MACRS schedule) (Enteryour answers in dollars, not millions of dollars, e.g. 1,234,567.Negative amounts should be indicated by a minus sign. Do not roundintermediate calculations and round your final answers to 2 decimalplaces, e.g., 32.16.)
  YearsCash Flow
  Year 0$   -2840000
  Year 1$   1148390.76
  Year 2$   1245935.4
  Year 3$ ?
NPV ?

If the required return is 15 percent, what is the project's NPV?(Enter your answer in dollars, not millions of dollars,e.g. 1,234,567. Do not round intermediate calculations and roundyour final answer to 2 decimal places, e.g., 32.16.)

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