Eggz, Incorporated, is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale. The equipment will cost $510,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $96,000 at the end of the project in 5 years. Sales would be $363,000 per year, with annual fixed costs of $64,000 and variable costs equal to 39 percent of sales. The project would require an investment of $59,000 in NWC that would be returned at the end of the project. The tax rate is 22 percent and the required return is 12 percent. Calculate the NPV of this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV $ 172,390.53
Eggz, Incorporated, is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale. The equipment will cost $510,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $96,000 at the end of the project in 5 years. Sales would be $363,000 per year, with annual fixed costs of $64,000 and variable costs equal to 39 percent of sales. The project would require an investment of $59,000 in NWC that would be returned at the end of the project. The tax rate is 22 percent and the required return is 12 percent. Calculate the NPV of this project. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV $ 172,390.53
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
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Transcribed Image Text:Eggz, Incorporated, is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale.
The equipment will cost $510,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $96,000 at
the end of the project in 5 years. Sales would be $363,000 per year, with annual fixed costs of $64,000 and variable costs equal to 39
percent of sales. The project would require an investment of $59,000 in NWC that would be returned at the end of the project. The tax
rate is 22 percent and the required return is 12 percent. Calculate the NPV of this project.
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
NPV
$
172,390.53
ces
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