Esfandiari Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.46 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 $2,000,000 in annual sales, with costs of $695,000. The tax rate is 23 percent and the required return is 16 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. NPV

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
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Esfandiari Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.46 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 $2,000,000 in annual sales, with costs of $695,000. The tax rate is 23 percent and the required return is 16
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.
NPV
Transcribed Image Text:Esfandiari Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.46 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 $2,000,000 in annual sales, with costs of $695,000. The tax rate is 23 percent and the required return is 16 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. NPV
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