What is the project npv of five stars inc

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Five Stars Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of 3.9 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 $2,650,000 in annual sales, with costs of $840,000. Suppose the project requires an initial investment in net working capital of $300,000 and the net working capital will be fully recovered at the end of the project. If the tax rate is 21% and the required rate of return on the project is 12%, what is the project's NPV?

Reference no: EM132411025

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