What the required return on the project is

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Question 1: Quad Enterprises is considering a new 3-year expansion project that requires an initial fixed asset investment of $5.3 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $415,800 after 3 years. The project requires an initial investment in net working capital of $594,000. The project is estimated to generate $4,752,000 in annual sales, with costs of $1,900,800. The tax rate is 23 percent and the required return on the project is 16 percent.

mars table

3year

Option 1: 133.33%

Option 2: 44.45%

Option 3: 14.81%

Option 4: 7.41%

Reference no: EM132496983

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