Gateway Communications is considering a project with an initial fixed assets cost of $1.53 million that...

 

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Gateway Communications is considering a project with an initial fixed assets cost of $1.53 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $242,000. The project will not change sales but will reduce operating costs by $403,000 per year. The tax rat is 23 percent and the required return is 11.7 percent. The project will require $53,000 in net working capital, which will be recouped when the project ends. What is the project's NPV? Gateway Communications is considering a project with an initial fixed assets cost of $1.53 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $242,000. The project will not change sales but will reduce operating costs by $403,000 per year. The tax rat is 23 percent and the required return is 11.7 percent. The project will require $53,000 in net working capital, which will be recouped when the project ends. What is the project's NPV?

Answer rating: 100% (QA)

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