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

80.2K

Verified Solution

Question

Finance

Quad Enterprises is considering a new three-year expansionproject that requires an initial fixed asset investment of $2.31million. The fixed asset will be depreciated straight-line to zeroover its three-year tax life. The project is estimated to generate$1,725,000 in annual sales, with costs of $635,000. The projectrequires an initial investment in net working capital of $280,000,and the fixed asset will have a market value of $225,000 at the endof the project.
a. If the tax rate is 23 percent, what is the project’s Year 0 netcash flow? Year 1? Year 2? Year 3? (Do not roundintermediate calculations and enter your answers in dollars, notmillions of dollars, e.g., 1,234,567. A negative answer should beindicated by a minus sign.)
b.
If the required return is 11 percent, what is the project's NPV?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

Answer & Explanation Solved by verified expert

4.3 Ratings (910 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Quad Enterprises is considering a new three-year expansionproject that requires an initial fixed asset investment of $2.31million. The fixed asset will be depreciated straight-line to zeroover its three-year tax life. The project is estimated to generate$1,725,000 in annual sales, with costs of $635,000. The projectrequires an initial investment in net working capital of $280,000,and the fixed asset will have a market value of $225,000 at the endof the project.a.If the tax rate is 23 percent, what is the project’s Year 0 netcash flow? Year 1? Year 2? Year 3? (Do not roundintermediate calculations and enter your answers in dollars, notmillions of dollars, e.g., 1,234,567. A negative answer should beindicated by a minus sign.)b.If the required return is 11 percent, what is the project's NPV?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)

a.	If the tax rate is 23 percent, what is the project’s Year 0 netcash flow? Year 1? Year 2? Year 3? (Do not roundintermediate calculations and enter your answers in dollars, notmillions of dollars, e.g., 1,234,567. A negative answer should beindicated by a minus sign.)
b.	If the required return is 11 percent, what is the project's NPV?(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)