6. I need help with this question Chauhan Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $1.96 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 isestimated to generate $1.445 million in annual sales, with costs of $580,000. The project requires an initial investment in net workingcapital of $250,000, and the fixed asset will have a market value of $180,000 at the end of the project. The tax rate is 21 percent.a. What is the project's Year O net cash flow? Year 1? Year 2? Year 3?Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answersin dollars, not millions of dollars, e.g., 1,234,567.b. If the required return is 12 percent, what is the project's NPV?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.a. Year 0 cash flowYear 1 cash flowYear 2 cash flowYear 3 cash flowb. NPV

To determine the cash flows for the project, we first calculated the initial investment, which…

Answered: Chauhan Enterprises is considering a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 4P

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