Answer Happy

Esfandairi Enterprises is considering a new three-year expansionproject that requires an initial fixed asset investment of $2.18million. The fixed asset will be depreciated straight- line to zeroover its three-year tax life, after which time it will beworthless. The project is estimated to generate $1.645 million inannual sales, with costs of $610,000. The project requires aninitial investment in net working capital of $250,000, and thefixed asset will have a market value of $180,000 at the end of theproject. The tax rate is 21 percent. a. What is the project's YearO net cash flow? Year 1? Year 2? Year 3? (A negative answer shouldbe indicated by a minus sign. Do not round intermediatecalculations and enter your answers in dollars, not millions ofdollars, e.g., 1,234,567.) b. If the required return is 12 percent,what is the project's NPV? (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.)