Question: quad enterprises is considering a new threeyear expansion project that...
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.29 million. The fixed asset qualifies for 100 percent bonus depreciation in the first year. The project is estimated to generate $1,810,000 in annual sales, with costs of $700,000. The project requires an initial investment in net working capital of $450,000, and the fixed asset will have a market value of $480,000 at the end of the project.
If the tax rate is 25 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3?
|b.||If the required return is 12 percent, what is the project's NPV?|