Question: Multimedia Entertainment is considering a project with an intitial fixed asset cost of $ 7 5 0 , 0 0 0 that will be depreciated

Multimedia Entertainment is considering a project with an intitial fixed asset cost of $750,000 that will be depreciated straightline to a zero book value over the 6 year life of the project. At the end of the project, the equipment will be sold for an estimated $185,000. The project will generate sales of $295,000 per year. Variable costs are 20% of sales. Fixed costs are $36,000 per year. The tax rate is 21% and the required rate of return is 9%. The project will require $26,000 in net working capital, which will be recouped in the final year of the project. What is the projects NPV? Please give your answer in dollars and cents. Please answer by filling out a Pro Forma Income Statement, and a Cash Flow from Assets (CFFA) table. Thank you very very much I appreciate it!!

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!