cesEsfandairi Enterprises is considering a new three-year expansion project that requires aninitial 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 isestimated to generate $1.645 million in annual sales, with costs of $610,000. The projectrequires an initial investment in net working capital of $250,000, and the fixed asset willhave 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? (A negative answershould be indicated by a minus sign. Do not round intermediate calculations andenter your answers in dollars, not millions of dollars, e.g., 1,234,567.)b. If the required return is 12 percent, what is the project's NPV? (Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)a. Year 0 cash flowa. Year 1 cash flowa. Year 2 cash flowa. Year 3 cash flowb. NPV

Year 0 Initial fixed investment = $2,180,000Initial investment in net workingcapital = $250,000Sales…

What is the project's Year O net cash flow? Year 1? Year 2? Year 3? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, e.g., 1,234,567.) If the required return is 12 percent, what is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the project's Year O net cash flow? Year 1? Year 2? Year 3? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, e.g., 1,234,567.) If the required return is 12 percent, what is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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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