Gateway Communications is considering a project with an initial fixed assets cost of $1.58 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of theproject the equipment will be sold for an estimated $237,000. The project will not change sales but will reduce operating costs by $393,000 per year. The tax rate is 34 percent and the required return is 11.2percent. The project will require $50,500 in net working capital, which will be recouped when the project ends. What is the project's NPV?Multiple Choice$242,544$202,140$250,629$233,215$193,351

NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

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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