Question

Use NPV function to compute (Excel)??? ---- Correct answer is 233,958.25

X Calculating NPV - Excel Sign In FILE DATA НОМE INSERT PAGE LAYOUT FORMULAS REVIEW VIEW Arial 12 A A Cell Formatting as Table Styles Cells Editing A Alignment Number Conditional Format Paste В IU Clipboard Font Styles D34 fox С F н I 1 2. Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.9 million. The fixed asset will be depreciated on a three-year MACRS schedule. The project is estimated to generate $2,190,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? 3 4 5 $ 2,900,000 2,190,000 815,000 6 Asset investment Estimated annual sales $ $ 7 Costs Net working capital $ 9 300,000 $ 210,000 10 Pretax salvage value 11 Tax rate 21% 12 Project and asset life 13 Required return MACRS percentages Year 1 3 12% 14 15 0.3333 0.4445 16 Year 2 17 Year 3 0.1481 18 19

Answer 1

Using Microsoft Excel
In cell D42, enter the below formula
=NPV(D13,D40:H40)*(1+D13)