Gateway Communications is considering a project with an initial fixed assets cost of $169 million that will be depreciated straight-line to a zero bookvalue over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $227,000. The project will not change salesbut will reduce operating costs by $381,000 per year. The tax rate is 23 percent and the required return is 10 2 percent. The project will require $45,500in net working capital, which will be recouped when the project ends. What is the project's NPV?Multiple Choice.$371.951$430,100$400,224$416.233$355,779b

NPV is one of the most popular method of valuation in capital budgeting. NPV is a method that helps…

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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