Expansion project-requires initial fixed asset investment

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Reference no: EM131055582

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.61 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,050,000 in annual sales, with costs of $745,000. The project requires an initial investment in net working capital of $270,000, and the fixed asset will have a market value of $275,000 at the end of the project. If the tax rate is 30 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3?

Reference no: EM131055582

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