Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by $409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when the project ends. What is the project's NPV? Multiple Choice $127,831 $133,641 C $169,560 $176,342 $182,220
Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by $409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when the project ends. What is the project's NPV? Multiple Choice $127,831 $133,641 C $169,560 $176,342 $182,220
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:Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year
life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by
$409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when
the project ends. What is the project's NPV?
Multiple Choice
$127,831
$133,641
C
$169,560
$176,342
$182,220
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