A new project involves the purchase of a $9000 food processing machine. The machine would be depreciated on a straight-line basis over its 3-year useful life to a book value of $672. At the end of the life of the project (at the year 3 point), the machine will be sold for an estimated $120. The project will cause an increase in Sales of $6,354 in each of years 1 through 3. It is also expected to enhance efficiencies and reduce operating expenses by $1,784 in each of years 1 through 3. The project will require an increase in Accounts Receivable of $1,087 and an increase in Accounts Payable of $1,200 up front. The project's impact on these accounts is expected to disappear at project end (in year 3). The firm's marginal tax rate is 40 %, and its WACC is 12%. The NPV of this project is $ Round your final answer to 2 decimal places (example: if your answer is 12.3456, you should enter 12.35).

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
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See sir please before doing follow these points (very important), if followed ill definitely like and if can't follow please skip:- also you may use excel if you want but pls steps are mandatory.

A) dont do handwritten

B) explain every concept and step

C) skip if you are unsure

D) pls don't copy

Ill definitely like the answer.

A new project involves the purchase of a $9000 food processing machine. The machine would be
depreciated on a straight-line basis over its 3-year useful life to a book value of $672. At the end of the
life of the project (at the year 3 point), the machine will be sold for an estimated $120. The project will
cause an increase in Sales of $6,354 in each of years 1 through 3. It is also expected to enhance
efficiencies and reduce operating expenses by $1,784 in each of years 1 through 3. The project will
require an increase in Accounts Receivable of $1,087 and an increase in Accounts Payable of $1,200 up
front. The project's impact on these accounts is expected to disappear at project end (in year 3). The
firm's marginal tax rate is 40%, and its WACC is 12%. The NPV of this project is $
Round your
final answer to 2 decimal places (example: if your answer is 12.3456, you should enter 12.35).
Transcribed Image Text:A new project involves the purchase of a $9000 food processing machine. The machine would be depreciated on a straight-line basis over its 3-year useful life to a book value of $672. At the end of the life of the project (at the year 3 point), the machine will be sold for an estimated $120. The project will cause an increase in Sales of $6,354 in each of years 1 through 3. It is also expected to enhance efficiencies and reduce operating expenses by $1,784 in each of years 1 through 3. The project will require an increase in Accounts Receivable of $1,087 and an increase in Accounts Payable of $1,200 up front. The project's impact on these accounts is expected to disappear at project end (in year 3). The firm's marginal tax rate is 40%, and its WACC is 12%. The NPV of this project is $ Round your final answer to 2 decimal places (example: if your answer is 12.3456, you should enter 12.35).
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