Assume the required return on the project

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Teak Furniture Co. is considering a new three-year expansion project that requires an initial fixed asset investment of $2,640,000. 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 $964,000 in operating cash flow. It will require a $10,000 investment in net working capital. Assume the required return on the project is 6 percent. What is the project’s NPV? Should the firm accept or reject the project?

Reference no: EM13898724

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