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USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.

USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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%
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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