a. What are the net cash flows of the project each year? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32. b. What is the NPV of the project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
a. What are the net cash flows of the project each year? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32. b. What is the NPV of the project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Please help me find the Net cash flows of the project for each year and the NPV of the project using excel.
![Problem 9-11 Calculating Project Cash Flow from Assets
[LO 2]
Esfandairi Enterprises is considering a new three-year expansion project that
requires an initial fixed asset investment of $2,480,000. The fixed asset will
be depreciated straight-line to zero over its three-year tax life. The project is
estimated to generate $3,470,000 in annual sales, with costs of $2,450,000.
The project requires an initial investment in net working capital of $158,000,
and the fixed asset will have a market value of $193,000 at the end of the
project. Assume that the tax rate is 25 percent and the required return on
the project is 9 percent.
a. What are the net cash flows of the project each year?
Note: A negative answer should be indicated by a minus sign. Do not
round intermediate calculations and round your answers to the nearest
whole number, e.g., 32.
b. What is the NPV of the project?
Note: Do not round intermediate calculations and round your answer to
2 decimal places, e.g., 32.16.
a. Year 0 cash flow
Year 1 cash flow
Year 2 cash flow
Year 3 cash flow
b. NPV](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F483c3d17-1621-47af-bfd2-86acecf64938%2F4399be18-1980-4a3a-8ba8-694a5c5de9c4%2Fna9c4b_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 9-11 Calculating Project Cash Flow from Assets
[LO 2]
Esfandairi Enterprises is considering a new three-year expansion project that
requires an initial fixed asset investment of $2,480,000. The fixed asset will
be depreciated straight-line to zero over its three-year tax life. The project is
estimated to generate $3,470,000 in annual sales, with costs of $2,450,000.
The project requires an initial investment in net working capital of $158,000,
and the fixed asset will have a market value of $193,000 at the end of the
project. Assume that the tax rate is 25 percent and the required return on
the project is 9 percent.
a. What are the net cash flows of the project each year?
Note: A negative answer should be indicated by a minus sign. Do not
round intermediate calculations and round your answers to the nearest
whole number, e.g., 32.
b. What is the NPV of the project?
Note: Do not round intermediate calculations and round your answer to
2 decimal places, e.g., 32.16.
a. Year 0 cash flow
Year 1 cash flow
Year 2 cash flow
Year 3 cash flow
b. NPV
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