Question: please show all work and equations and ill rate thumbs up! thank you! 5. (15 points) Computational a. (5 points) Noname, Inc. is considering a

 please show all work and equations and ill rate thumbs up! please show all work and equations and ill rate thumbs up! thank you!

5. (15 points) Computational a. (5 points) Noname, Inc. is considering a new three-year expansion project that requires an initial fixed asset investment of $1,050,000. The fixed asset will be depreciated straight- line to zero over its three-year tax life. The project is estimated to generate $1,250,000 in annual sales, with costs of $400,000. If the tax rate is 25 percent, what is the OCF for this project? b. (3 points) If the fixed asset can be sold for $300,000 at the end of the project, what is the after tax salvage value of the fixed asset? c. (7 points) Now, suppose the project will allow you to decrease initial networking capital by $20,000. Assuming that working capital will revert back to normal at the end of the project, and that the firm's WACC for projects of this risk is 10%, what is the NPV

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!