Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $199,000 and be
Question:
Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $199,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $136,000, variable costs of $36,700, and fixed costs of $12,950. The project will also require net working capital of $3,550 which will be returned at the end of the project. The company has a tax rate of 34 percent and the project's required return is 9 percent. What is the net present value of this project?
Multiple Choice
$39,400
$42,928
$40,646
$36,116
$41,892
Foundations of Finance
ISBN: 978-0134084015
9th edition
Authors: Arthur J. Keown, John H. Martin, J. William Petty