Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $151,200 after 3 years. The project requires an initial investment in net working capital of $216,000. The project is estimated to generate $1,728,000 in annual sales, with costs of $691,200. The tax rate is 23 percent and the required return on the project is 17 percent. What is the project's year 0 net cash flow? What is the project's year 1 net cash flow? What is the project's year 2 net cash flow? What is the project's year 3 net cash flow?
Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $151,200 after 3 years. The project requires an initial investment in net working capital of $216,000. The project is estimated to generate $1,728,000 in annual sales, with costs of $691,200. The tax rate is 23 percent and the required return on the project is 17 percent. What is the project's year 0 net cash flow? What is the project's year 1 net cash flow? What is the project's year 2 net cash flow? What is the project's year 3 net cash flow?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 17P
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Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $1.9 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $151,200 after 3 years. The project requires an initial investment in net working capital of $216,000. The project is estimated to generate $1,728,000 in annual sales, with costs of $691,200. The tax rate is 23 percent and the required return on the project is 17 percent. |
| What is the project's year 0 net cash flow? |
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| What is the project's year 1 net cash flow? |
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| What is the project's year 2 net cash flow? |
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| What is the project's year 3 net cash flow? |
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