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USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.

USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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USE CELLS A6 TO B10 FROM THE GIVEN INFORMATION TO COMPLETE THIS QUESTION.

Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 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 $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? Input area: Asset investment Estimated annual sales Costs Tax rate Project and asset life Required return Output area: (Use cells A6 to B10 from the given information to complete this question.) Sales Costs Depreciation $2,180,000 $1,645,000 $610,000 EBT Taxes Net income OCF NPV 21% 3 12%
Transcribed Image Text:Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.18 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 $1.645 million in annual sales, with costs of $610,000. The tax rate is 21 percent. If the required return is 12 percent, what is the project's NPV? Input area: Asset investment Estimated annual sales Costs Tax rate Project and asset life Required return Output area: (Use cells A6 to B10 from the given information to complete this question.) Sales Costs Depreciation $2,180,000 $1,645,000 $610,000 EBT Taxes Net income OCF NPV 21% 3 12%
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