Requires an initial fixed asset investment

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Reference no: EM131020390

Down Under Boomerang, Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $4,200,000. 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 $3,450,000 in annual sales, with costs of $1,612,500. The tax rate is 35 percent and the required return is 10 percent. What is the project’s NPV?

Reference no: EM131020390

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