Why the fixed asset will have a market value


Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.97 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,170,000 in annual sales, with costs of $847,000. The project requires an initial investment in net working capital of $390,000, and the fixed asset will have a market value of $255,000 at the end of the project. If the tax rate is 35 percent and the required return is 9 percent, what is the project's Year 1 net cash flow? Year 2? Year 3? USE MACRS

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Finance Basics: Why the fixed asset will have a market value
Reference No:- TGS0724447

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