USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6P
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Question
USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.
![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?
Input area:
Asset investment
Estimated annual sales
Costs
Tax rate
Project and asset life
Required return
Output area:
(Use cells A6 to B10 from the given information to complete this question.)
Sales
Costs
Depreciation
$2,180,000
$1,645,000
$610,000
EBT
Taxes
Net income
OCF
NPV
21%
3
12%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F67c8dfa2-b702-4ef7-a40f-9f34dfda5707%2F99dd8c08-c9fd-44b1-8696-6f7759337be2%2Flkbsl4e_processed.png&w=3840&q=75)
Transcribed Image Text: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?
Input area:
Asset investment
Estimated annual sales
Costs
Tax rate
Project and asset life
Required return
Output area:
(Use cells A6 to B10 from the given information to complete this question.)
Sales
Costs
Depreciation
$2,180,000
$1,645,000
$610,000
EBT
Taxes
Net income
OCF
NPV
21%
3
12%
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