Considering new three-year expansion project

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Sextet Corporation is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million. The fixed asset is classified as a five-year asset under MACRS for taxes and will be depreciated straight-line to zero over the three-year project life for book accounting. At the end of the project, Sextet believes the asset can be sold for $800,000. The project is estimated to generate $2,160,000 in annual sales, with annual costs of $855,000. Net working capital for the project is expected to be $425,000. The tax rate is 34 percent and the required return on the project is 10 percent. What is the project’s NPV? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131884013

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