Quad Enterprises is considering a new three-year expansion project that requires
ID: 2491071 • Letter: Q
Question
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.47 million. The fixed asset will be depreciated straight-line over its three-year tax life, and the fixed asset will have a market value of $254871 at the end of the project. The project is estimated to generate $2086353 in annual sales, with costs of $893856. The project requires an initial investment in net working capital of $367488. If the tax rate is 31 percent and the required return on the project is 9 percent, what is the project's NPV?
Explanation / Answer
Quad Enterprises is considering a new three-year expansion project that requires