Phone Home, Inc. is considering a new 4-year expansion project that requires an initial fixed asset...
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Phone Home, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of $232,000. The project requires an initial investment in net working capital of $330,000. The project is estimated to generate $2,640,000 in annual sales, with annual costs of $1,056,000. The tax rate is 35 percent and the required return for the project is 20 percent. What is the net present value for this project? Phone Home, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of $232,000. The project requires an initial investment in net working capital of $330,000. The project is estimated to generate $2,640,000 in annual sales, with annual costs of $1,056,000. The tax rate is 35 percent and the required return for the project is 20 percent. What is the net present value for this project?
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ANSWER Annual Depreciation CostEstimated Life 30000004 750000 Initial Investment 3000000 33000... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Posted Date:
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