Air Taxi, Inc. is considering a new 3-year expansion project that requires an initial fixed asset investment of $1,350,000 million dollars.

Air Taxi, Inc. is considering a new 3-year expansion project that requires an initial fixed asset investment of $1,350,000 million dollars. The asset will be depreciated over a 3 year tax life and have no salvage value. The project is estimated to have annual cash flows of $1,230,000 with a cost of $460,000. The tax rate is 35% percent and the required rate of return is 12% percent.

What is the project NPV?

Asset investment  = $1,350,000

Estimated annual sales  = $1,230,000

Costs  = $ 460,000

Tax rate = 35%

*Depreciation straight-line

 to zero over tax life = 3  

Required return =12%

$859,712.05

$(234,111.16)

$(2,944,083.56)

$244,083.56