# Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of \$2.29 million. The fixed asset falls into the 3-year MACRS class (MACRS schedule). The project is estimated to generate \$1,715,000 in annual sales, with costs of \$624,000. The project requires an initial investment in net working capital of \$260,000, and the fixed asset will have a market value of \$195,000 at the end of the project.  a.If the tax rate is 21 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.)b.If the required return is 9 percent, what is the project's NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.)

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 Down Under Boomerang, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of \$2.29 million. The fixed asset falls into the 3-year MACRS class (MACRS schedule). The project is estimated to generate \$1,715,000 in annual sales, with costs of \$624,000. The project requires an initial investment in net working capital of \$260,000, and the fixed asset will have a market value of \$195,000 at the end of the project.

 a. If the tax rate is 21 percent, what is the project’s Year 0 net cash flow? Year 1? Year 2? Year 3? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.) b. If the required return is 9 percent, what is the project's NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to two decimal places, e.g., 1,234,567.89.)

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Step 1

a.)

Computation of net cash flows of year 0 to year 3:

Step 2

The cash outflow is as follows:

Step 3

Working note:

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