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Keiper Inc is considering a new three year expansion project that requires an initial fixed asset investment of $27 million The fixed asset will be depreciated straight line to zero over its

Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.7 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 $2,080,000 in annual sales, with costs of $775,000. The project requires an initial investment in net working capital of $300,000, and the fixed asset will have a market value of $210,000 at the end of the project. If the tax rate is 35 percent, what is the project's year 0 net cash flow? Year 1? Year 2? Year 3?

If the required return is 12 percent, what is the project's NPV?

How do you get CF3

 

May 13 2020 View more View Less

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