Germaine Metals is considering installing a new molding machine which is expected to produce operating cash flows of $52,200 per year for 7 years. At the beginning of the project, inventory will increase by $19,800, accounts receivables will increase by $15,400, and accounts payable will increase by $19,000. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $262,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project creating an aftertax cash flow of $42,400. What is the net present value of this project given a required return of 12.7 percent? Change in NWC = $ CFO = $ CF7 = $ NPV = $
Germaine Metals is considering installing a new molding machine which is expected to produce operating cash flows of $52,200 per year for 7 years. At the beginning of the project, inventory will increase by $19,800, accounts receivables will increase by $15,400, and accounts payable will increase by $19,000. At the end of the project, net working capital will return to the level it was prior to undertaking the new project. The initial cost of the molding machine is $262,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project creating an aftertax cash flow of $42,400. What is the net present value of this project given a required return of 12.7 percent? Change in NWC = $ CFO = $ CF7 = $ NPV = $
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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![Germaine Metals is considering installing a new
molding machine which is expected to produce
operating cash flows of $52,200 per year for 7 years.
At the beginning of the project, inventory will
increase by $19,800, accounts receivables will
increase by $15,400, and accounts payable will
increase by $19,000. At the end of the project, net
working capital will return to the level it was prior to
undertaking the new project. The initial cost of the
molding machine is $262,000. The equipment will be
depreciated straight-line to a zero book value over
the life of the project. The equipment will be
salvaged at the end of the project creating an
aftertax cash flow of $42,400. What is the net
present value of this project given a required return
of 12.7 percent?
Change in NWC = $
CFO = $
CF7 = $
NPV = $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F455cdddc-88d4-4ee5-87c5-3392e488c691%2F120cb8d8-f431-449d-866a-01b981082cdb%2F54h8hkt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Germaine Metals is considering installing a new
molding machine which is expected to produce
operating cash flows of $52,200 per year for 7 years.
At the beginning of the project, inventory will
increase by $19,800, accounts receivables will
increase by $15,400, and accounts payable will
increase by $19,000. At the end of the project, net
working capital will return to the level it was prior to
undertaking the new project. The initial cost of the
molding machine is $262,000. The equipment will be
depreciated straight-line to a zero book value over
the life of the project. The equipment will be
salvaged at the end of the project creating an
aftertax cash flow of $42,400. What is the net
present value of this project given a required return
of 12.7 percent?
Change in NWC = $
CFO = $
CF7 = $
NPV = $
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