Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require
Question:
Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $4,000,000 and would generate annual net cash inflows of $900,000 per year for 6 years. Calculate the project's NPV using a discount rate of 8 percent.
Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $4,000,000 per year for each of the next 7 years. In year
7 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at
$0.8 million. Thus, in year 7 the investment cash inflow totals $4,800,000. Calculate the project's NPV using a discount rate of 6 percent.
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin