What is the project npv

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Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.52 million. 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 $2,020,000 in annual sales, with costs of $715,000. The project requires an initial investment in net working capital of $240,000, and the fixed asset will have a market value of $290,000 at the end of the project.

A.) If the tax rate is 21 percent, what is the projects year 0 net cash flow? year 1? Year 2? Year3?

B.) If the required return is 16 percent, what is the project's NPV?

Reference no: EM133061782

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