Esfandairi Enterprises is considering a new three-year expansion project that requires aninitial fixed asset investment of $2.31 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 $1,725,000 in annual sales, with costs of $635,000. The tax rate is23 percent and the required return on the project is 12 percent. What is the project'sNPV? (Do not round intermediate calculations. Enter your answer in dollars, notmillions of dollars, and round your answer to 2 decimal places, e.g., 1,234,567.89.)NPV

NP3 is the difference between the projected value of cash flow and initial investment and it must be…

vestment of $2.31 million. The fixed asset will be depr s three-year tax life, after which time it will be worthles rate $1,725,000 in annual sales, with costs of $635,000 e required return on the project is 12 percent. What und intermediate calculations. Enter your answer and round your answer to 2 decimal places, e.g., 1,2

vestment of $2.31 million. The fixed asset will be depr s three-year tax life, after which time it will be worthles rate $1,725,000 in annual sales, with costs of $635,000 e required return on the project is 12 percent. What und intermediate calculations. Enter your answer and round your answer to 2 decimal places, e.g., 1,2

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

Problem 1PS

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Question

Esfandairi Enterprises is considering a new three-year expansion project that requires an
initial fixed asset investment of $2.31 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 $1,725,000 in annual sales, with costs of $635,000. The tax rate is
23 percent and the required return on the project is 12 percent. What is the project's
NPV? (Do not round intermediate calculations. Enter your answer in dollars, not
millions of dollars, and round your answer to 2 decimal places, e.g., 1,234,567.89.)
NPV

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