Gateway Communications is considering a project with an initial fixed assets cost of $1.71 million that will be depreciated straight-line to a zero book value overthe 10-year life of the project. At the end of the project the equipment will be sold for an estimated $229,000. The project will not change sales but will reduceoperating costs by $382,000 per year. The tax rate is 25 percent and the required return is 10.4 percent. The project will require $46,500 in net working capital,which will be recouped when the project ends. What is the project's NPV?Multiple Choice$342,654$356,360$313,442$368,238$299,814

Initial investment = $1,710,000Salvage value = $229,000Investment in Net Working Capital =…

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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