Answer Happy

MOU is considering a new 4-year expansion project that requires an initial fixed asset investment of A$3 million The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of A$225,000. The project requires an initial investment in net working capital of A$330,000, all of which will be recovered at the end of the project. The project is estimated to generate A$2,640,000 in annual sales, with costs of A$1,056,000 in the first three years, followed by A$2,050,000 of sales and A$1,100,000 of costs in the year. The tax rate is 33 percent and the required return for the project is 15 percent. Is the project acceptable? Show all the necessary work