ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $773,300.00 work cell. Further, it will cost the firm $56,300.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $72,900.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,300.00. Finally, the firm will invest $10,400.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $918,000.00 with expenses estimated at 37.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $500,000.00 at the end of the fourth year. The firm expects to reclaim 90.00% of the final NWC position. The cost of capital is 10.00%. What is the NPV the project if we end the project after 4 years? Answer Format: Currency: Round to: 2 decimal places. Enter Answer Here...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $773,300.00 work cell. Further, it will cost the firm $56,300.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $72,900.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,300.00. Finally, the firm will invest $10,400.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $918,000.00 with expenses estimated at 37.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 38.00%. The work cell is estimated to have a market value of $500,000.00 at the end of the fourth year. The firm expects to reclaim 90.00% of the final NWC position. The cost of capital is 10.00%. What is the NPV the project if we end the project after 4 years? Answer Format: Currency: Round to: 2 decimal places. Enter Answer Here...
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $773,300.00 work cell. Further, it will cost the firm $56,300.00 to get the work cell delivered and installed. The work cell will be straight-line
Transcribed Image Text:ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $773,300.00 work cell. Further, it will cost the firm
$56,300.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be
trained at a cost of $72,900.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,300.00.
Finally, the firm will invest $10,400.00 in net working capital to ensure the project has sufficient resources to be successful.
The project will generate annual sales of $918,000.00 with expenses estimated at 37.00% of sales. Net working capital will be held constant throughout the project. The tax rate is
38.00%.
The work cell is estimated to have a market value of $500,000.00 at the end of the fourth year. The firm expects to reclaim 90.00% of the final NWC position.
The cost of capital is 10.00%.
What is the NPV the project if we end the project after 4 years?
Answer Format: Currency: Round to: 2 decimal places.
Enter Answer Here...
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education