Expansion project that requires initial fixed asset

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Reference no: EM131533283

Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.53 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life and is estimated to have a market value of $203305 at the end of the project. The project is estimated to generate $2017807 in annual sales, with costs of $821021. The project requires an initial investment in net working capital of $360556. If the tax rate is 33 percent and the required return on the project is 12 percent, what is the project's NPV?

Reference no: EM131533283

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