Requires an initial fixed asset investment

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Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will have a market value of $291878. The project is estimated to generate $2309953 in annual sales, with costs of $972633. The project requires an initial investment in net working capital (NWC) of $290958 and the same amount of NWC in every year of production. If the tax rate is 24 percent, what is the project's Year 3 net cash flow (i.e. cash flow from assets)?

Reference no: EM131070503

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