hian, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of $225,000. The project requires an initial investment in net working capital of $330,000, all of which will be recovered at the end of the project. The project is estimated to generate $2,640,000 in annual sales, with costs of $1,056,000. The tax rate is 33 percent and the required return for the project is 15 percent. What is the net present value for this project? Select one: O a. $714,056 O b. $681,409 O c. $741,335 O d. $742,208 O e. $744,595
hian, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of $225,000. The project requires an initial investment in net working capital of $330,000, all of which will be recovered at the end of the project. The project is estimated to generate $2,640,000 in annual sales, with costs of $1,056,000. The tax rate is 33 percent and the required return for the project is 15 percent. What is the net present value for this project? Select one: O a. $714,056 O b. $681,409 O c. $741,335 O d. $742,208 O e. $744,595
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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Appalachian, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of $225,000. The project requires an initial investment in net working capital of $330,000, all of which will be recovered at the end of the project. The project is estimated to generate $2,640,000 in annual sales, with costs of $1,056,000. The tax rate is 33 percent and the required return for the project is 15 percent. What is the net present value for this project? Select one: O a. $714,056 O b. $681,409 O c. $741,335 O d. $742,208 O e. $744,595
Transcribed Image Text:Appalachian, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $3 million. The
fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of
$225,000. The project requires an initial investment in net working capital of $330,000, all of which will be recovered at the
end of the project. The project is estimated to generate $2,640,000 in annual sales, with costs of $1,056,000. The tax rate is
33 percent and the required return for the project is 15 percent. What is the net present value for this project?
Select one:
a. $714,056
Ob. $681,409.
O c. $741,335
O d. $742,208
O e. $744,595
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