7 1/5 points awarded 8 03:55:28 Scored Problem 9-11 Calculating Project Cash Flow from Assets [LO 2] Esfandairi Enterpri

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7 1 5 Points Awarded 8 03 55 28 Scored Problem 9 11 Calculating Project Cash Flow From Assets Lo 2 Esfandairi Enterpri 1 (120.39 KiB) Viewed 23 times

7 1/5 points awarded 8 03:55:28 Scored Problem 9-11 Calculating Project Cash Flow from Assets [LO 2] Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,300,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $3,070,000 in annual sales, with costs of $2,090,000. The project requires an initial investment in net working capital of $178,000, and the fixed asset will have a market value of $213,000 at the end of the project. Assume that the tax rate is 24 percent and the required return o the project is 11 percent. a. What are the net cash flows of the project each year? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32. b. What is the NPV of the project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. a. Year 0 cash flow Year 1 cash flow Year 2 cash flow Year 3 cash flow b. NPV $ -2,478,000 1,296,800 es es $ $ $ $ 744,800 X 1,084,680 87,893.34