This project requires an investment in fixed assets, at time 0, of 44,000,000. Assets will be
Question:
Assets will be depreciated straight line in 5 years.
This project has a 4 year life. The revenues for each of the 4 year of life are the following
Year 1, 2, 3, 4 Revenues 14,000,000 39,000,000 42,000,000 47,000,000
The cost of good sold and the level of working capital at the end of the year (the project starts with a 0 working capital at time 0) are reported below
Year 1, 2, 3, 4 Cost of goods sold 15,000,000 16,000,000 14,000,000 15,500,000 Working Capital 30,000,000 30,000,000 35,000,000, 0
The assets at the end of year 4 will have a salvage value of 1,000,000.
The opportunity cost of capital is 3.55%. You have positive taxable income coming from other investments in place. The corporate tax rate is 26%. .
- a)What is the NPV
Introduction to Governmental and Not for Profit Accounting
ISBN: 978-0132776011
7th edition
Authors: Martin Ives, Terry K. Patton, Suesan R. Patton