Question: Q5)STM Inc. is considering a 4-year project with an initial cost of $658,950. The project will not directly produce sales but will reduce operating costs

Q5)STM Inc. is considering a 4-year project with an initial cost of $658,950. The project will not directly produce sales but will reduce operating costs by $274,525 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $62,349. The tax rate is 39%. The project will require $36,933 in extra inventory for spare parts and accessories. STM requires a 7% rate of return. What is the NPV of the project? Round your response to the nearest dollar and input without the $ sign

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!

STM Inc. is considering a 4-year project with an initial cost of $550,604. The project will not directly produce sales but will reduce operating costs by $261,417 a year. The equipment is depreciated...

STM Inc. is considering a 4-year project with an initial cost of $540,739. The project will not directly produce sales but will reduce operating costs by $297,111 a year. The equipment is depreciated...

G 2 STM Inc. is considering a 4-year project with an initial cost of $792,032. The project will not directly produce sales but will reduce operating costs by $292,716 a year. The equipment is...

STM Inc. is considering a 4-year project with an initial cost of $637,893. The project will not directly produce sales but will reduce operating costs by $257,389 a year. The equipment is depreciated...

STM Inc. is considering a 4-year project with an initial cost of $763,289. The project will not directly produce sales but will reduce operating costs by $298,125 a year. The equipment is depreciated...

G 2 . STM Inc. is considering a 4-year project with an initial cost of $792,032. The project will not directly produce sales but will reduce operating costs by $292,716 a year. The equipment is de...

STM Inc. is considering a 3-year project with an initial cost of $825,590. The project will not directly produce sales but will reduce operating costs by $299,174 a year. The equipment is depreciated...

You are working on a bid to build four small apartment buildings a year for the next three years for a local community.This project requires the purchases of $900,000 of equipment which will be...

4. SPAIN Inc. is considering a 4-year project with an initial cost of $755,000. The project will not directly produce any sales but will reduce operating costs by $320,000 a year. The equipment is...

Service Experts is considering a 5-year project with an initial cost of $850,000.00The project will not directly produce any sales but will reduce operating costs by$304,183.35 a year, The equipment...

Calculate the binding energy of a K electron in vanadium whose L absorption edge has the wavelength L = 2.4 nm.

Redfern Corporation, a calendar year taxpayer, has been an S corporation for several years. Rod and Kurt each own 50% of Redferns stock. On July 1 of the current year (assume a non-leap year),...

Which of the following is true? Check all that apply. In the event that earnings are retained, the relative position of each investor is altered. Earnings from the company may be retained, rather...

A company issues 1,050 shares of its common stock for $33,600 cash. Prepare journal entries to record this event under each of the following separate situations.