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 $495,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $ 87,000 at the end of the project in 5 years. Sales would be $331,000 per year, with annual fixed costs of $61,000 and variable costs equal to 36 percent of sales. The project would require an investment of $53,000 in NWC that would be returned at the en of the project. The tax rate is 24 percent and the required return is 9 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places. e. a.. 32.16.)

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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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 $495,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $
87,000 at the end of the project in 5 years. Sales would be $331,000 per year, with annual fixed costs of $61,000 and variable
costs equal to 36 percent of sales. The project would require an investment of $53,000 in NWC that would be returned at the end
of the project. The tax rate is 24 percent and the required return is 9 percent. Calculate the NPV of this project. (Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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 $495,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $ 87,000 at the end of the project in 5 years. Sales would be $331,000 per year, with annual fixed costs of $61,000 and variable costs equal to 36 percent of sales. The project would require an investment of $53,000 in NWC that would be returned at the end of the project. The tax rate is 24 percent and the required return is 9 percent. Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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