Question

A company is interested In a new three-year Investment project. If the decision to accept the project is made, the company would need to immedlately spend $2.34 million to buy additional fixed assets. These assets will be losing the same amount of value over their three-year economic life. The company's calculations show that the project should be able to bring $1,740,000 In sales revenues every year, with annual production costs of $650,000. The net working capital would also immideately need to be increased by $310,000. The purchased fixed assets should be able to sell for $270,000 when the project ends a. The corporate Income tax rate is 21 percent. Calculate the project's Year O, Year 1, Year 2, and Year 3 total cash flows. (Do not round Intermedlate calculatlons and enter your answers In dollars, not mllllons of dollars, e.g., 1,234,567. A negatlve answer should be Indlcated by a minus sign.) b. The annual return typical for this kind of projects is 10 percent per year. Use this additional Information to calculate the project's net present value. (Do not round Intermedlate calculatlons and round your answer to 2 declmal places, e.g., 32.16.) a. Year 0 cash flow Year 1 cash flow Year 2 cash flow Year 3 cash flow b. NPV