Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,785,000 in annual sales, with costs of $695,000. The tax rate is 25 percent and the required return on the project is 12 percent. What is the project’s NPV?
Solution :
The project's NPV= $ 115,849.58
= $ 115,850 ( when rounded off to the nearest whole number )
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
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