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Incorrect answer second attempt Please solve Down Under Boomerang Inc is considering a new threeyear expansion project that requires an initial fixed asset investment of

Incorrect answer second attempt...

Please solve

Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3.00 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. The project is estimated to generate $2,180,000 in annual sales, with costs of $875,000. The tax rate is 30 percent and the required return is 9 percent. The project requires an initial investment in net working capital of $400,000, and the fixed asset will have a market value of $260,000 at the end of the project. What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.) Years Cash Flow Year 0 $ Year 1 $ Year 2 $ Year 3 $ What is the NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $

Exactlly>

What is the project's Year 0 net cash flow? Year 1? Year 2? Year 3? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Type exact answer please:

  Years                   Cash Flow
  Year 0 $   
  Year 1 $   
  Year 2 $   
  Year 3 $   
 

What is the NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Wrong answwer:

FYI...

  CF tax saving on depreciation Net CF
0 -3000000-400000 = -3400000   -3400000
1 2180000-875000 = 1305000 1000000*30% = 300000 1605000
2 2180000-875000 = 1305000 1000000*30% = 300000 1605000
3 2180000-875000 + 400000 + 260000= 1965000 1000000*30% = 300000 2265000
    1.09  
Year CF PVF @ 9% PV
0 -3400000 1 -3,400,000
1 1605000 0.917         1,472,477
2 1605000 0.842         1,350,896
3 2265000 0.772         1,748,996
       
    NPV         1,172,369
NPV 

Apr 03 2020 View more View Less

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