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B24 1 X✓fx =NPV(B6, B17:B19) - B5 A B C D E F G H N 3 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, after which time it will be worthless. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 4 Input area: 5 6 Asset investment $2,180,000 7 Estimated annual sales $1,645,000 8 Costs $610,000 9 Tax rate 21% 10 Project and asset life 3 12% 11 Required return 12 13 (Use cells A6 to B10 from the given information to complete this question.) 14 15 Output area: 16 17 Sales $1,645,000 18 Costs $610,000 19 Depreciation 726,667 20 EBT $308,333 21 Taxes 64,750 22 Net income $243,583 23 OCF $970,250 24 NPV 25 $1

B24 1 X✓fx =NPV(B6, B17:B19) - B5 A B C D E F G H N 3 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, after which time it will be worthless. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 4 Input area: 5 6 Asset investment $2,180,000 7 Estimated annual sales $1,645,000 8 Costs $610,000 9 Tax rate 21% 10 Project and asset life 3 12% 11 Required return 12 13 (Use cells A6 to B10 from the given information to complete this question.) 14 15 Output area: 16 17 Sales $1,645,000 18 Costs $610,000 19 Depreciation 726,667 20 EBT $308,333 21 Taxes 64,750 22 Net income $243,583 23 OCF $970,250 24 NPV 25 $1

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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B24 1 X✓fx =NPV(B6, B17:B19) - B5 A B C D E F G H N 3 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, after which time it will be worthless. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 4 Input area: 5 6 Asset investment $2,180,000 7 Estimated annual sales $1,645,000 8 Costs $610,000 9 Tax rate 21% 10 Project and asset life 3 12% 11 Required return 12 13 (Use cells A6 to B10 from the given information to complete this question.) 14 15 Output area: 16 17 Sales $1,645,000 18 Costs $610,000 19 Depreciation 726,667 20 EBT $308,333 21 Taxes 64,750 22 Net income $243,583 23 OCF $970,250 24 NPV 25 $1
Transcribed Image Text:B24 1 X✓fx =NPV(B6, B17:B19) - B5 A B C D E F G H N 3 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, after which time it will be worthless. The project is estimated to generate $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 4 Input area: 5 6 Asset investment $2,180,000 7 Estimated annual sales $1,645,000 8 Costs $610,000 9 Tax rate 21% 10 Project and asset life 3 12% 11 Required return 12 13 (Use cells A6 to B10 from the given information to complete this question.) 14 15 Output area: 16 17 Sales $1,645,000 18 Costs $610,000 19 Depreciation 726,667 20 EBT $308,333 21 Taxes 64,750 22 Net income $243,583 23 OCF $970,250 24 NPV 25 $1
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