Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.64 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,060,000 in annual sales, with costs of $755,000. The tax rate is 22 percent and the required return is 13 percent. What is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ 125,767.04

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
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Down Under Boomerang, Inc., is considering a new three-year expansion project that
requires an initial fixed asset investment of $2.64 million. The fixed asset will be
depreciated straight-line to zero over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $2,060,000 in annual sales, with costs of
$755,000. The tax rate is 22 percent and the required return is 13 percent. What is the
project's NPV? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
NPV
$
125,767.04
Transcribed Image Text:Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.64 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,060,000 in annual sales, with costs of $755,000. The tax rate is 22 percent and the required return is 13 percent. What is the project's NPV? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV $ 125,767.04
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