Question - Calculating Project NPV
Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3,400,000. 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 $2,600,000 in annual sales, with costs of $1,125,000. The tax rate is 35 percent and the required return is 10 percent. What is the project's NPV?