Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,460,000. 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 $2,950,000 in annual sales, with costs of $1,970,000. Assume the tax rate is 22 percent and the required return on the project is 9 percent. What is the project's NPV? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Net present value
Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,460,000. 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 $2,950,000 in annual sales, with costs of $1,970,000. Assume the tax rate is 22 percent and the required return on the project is 9 percent. What is the project's NPV? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Net present value
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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Esfandairi Ent. is considering a new three-year expansion project that requires an initial fixed asset...
![Problem 9-10 Calculating Project NPV [LO 2]
Esfandairi Enterprises is considering a new three-year expansion project that
requires an initial fixed asset investment of $2,460,000. 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 $2,950,000 in annual
sales, with costs of $1,970,000. Assume the tax rate is 22 percent and the
required return on the project is 9 percent. What is the project's NPV?
Note: A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.
Net present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F483c3d17-1621-47af-bfd2-86acecf64938%2F908e69a1-c3c9-40be-8c2b-a0787129da9f%2Fjjs7q75_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 9-10 Calculating Project NPV [LO 2]
Esfandairi Enterprises is considering a new three-year expansion project that
requires an initial fixed asset investment of $2,460,000. 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 $2,950,000 in annual
sales, with costs of $1,970,000. Assume the tax rate is 22 percent and the
required return on the project is 9 percent. What is the project's NPV?
Note: A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.
Net present value
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