Gateway Communications is considering a project with an initial fixed assets cost of $1.53 million thatwill be depreciated straight-line to a zero book value over the 9-year life of the project. At the end ofthe project the equipment will be sold for an estimated $242,000. The project will not change salesbut will reduce operating costs by $403,000 per year. The tax rate is 40 percent and the requiredreturn is 11.7 percent. The project will require $53,000 in net working capital, which will be recoupedwhen the project ends. What is the project's NPV?Multiple ChoiceOO$159,906$152,954$207,762$201,060$193,327

Net present is the difference between present value of all cash inflows and initial investment. NPV…

Answered: Gateway Communications is considering a…

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

Problem 1PS

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