What is the projects year zero net cash flow

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Reference no: EM131926516

Please solve

Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3.00 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life.

The project is estimated to generate $2,180,000 in annual sales, with costs of $875,000. The tax rate is 30 percent and the required return is 9 percent.

The project requires an initial investment in net working capital of $400,000, and the fixed asset will have a market value of $260,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations.

A negative answer should be indicated by a minus sign.) Years Cash Flow Year 0 $ Year 1 $ Year 2 $ Year 3 $ What is the NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $

Exactlly>

What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Type exact answer please:

Years	Cash Flow
Year 0	$
Year 1	$
Year 2	$
Year 3	$

What is the NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Wrong answwer:

FYI...

	CF	tax saving on depreciation	Net CF
0	-3000000-400000 = -3400000		-3400000
1	2180000-875000 = 1305000	1000000*30% = 300000	1605000
2	2180000-875000 = 1305000	1000000*30% = 300000	1605000
3	2180000-875000 + 400000 + 260000= 1965000	1000000*30% = 300000	2265000

		1.09
Year	CF	PVF @ 9%	PV
0	-3400000	1	-3,400,000
1	1605000	0.917	1,472,477
2	1605000	0.842	1,350,896
3	2265000	0.772	1,748,996

		NPV	1,172,369

NPV $

Reference no: EM131926516

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