Soylent Green is considering a new three -year expansion project to try a new product line in its cookie business. The initial outlay in fixed assets is $2.7 million and will be depreciated straight-line to zero over its three year tax life. There is an additional investment in net working capital of $300,000. After the 3 years the company will shut down operations and scrap the remaining assets for $210,000. Yearly sales and COGS will be $2,080,000 and $775,000 respectively. Assume that the cost of equity is 12% and the tax rate 35 % . Calculate the project's NPV. Question 14Answer a. $104, 622.30 b. $93, 930.22 c. $1, 163,250.0 d. $ 102,589.04 e. Problem can't be calculated with information given.

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
icon
Related questions
Question
Soylent Green is considering a new three-year expansion project to try a new product line in its cookie
business. The initial outlay in fixed assets is $2.7 million and will be depreciated straight-line to zero over its
three year tax life. There is an additional investment in net working capital of $300,000. After the 3 years the
company will shut down operations and scrap the remaining assets for $210,000. Yearly sales and COGS
will be $2,080,000 and $775,000 respectively. Assume that the cost of equity is 12% and the tax rate 35 % .
Calculate the project's NPV. Question 14Answer a. $104, 622.30 b. $93, 930.22 c. $1, 163,250.0 d. $
102,589.04 e. Problem can't be calculated with information given.
Transcribed Image Text:Soylent Green is considering a new three-year expansion project to try a new product line in its cookie business. The initial outlay in fixed assets is $2.7 million and will be depreciated straight-line to zero over its three year tax life. There is an additional investment in net working capital of $300,000. After the 3 years the company will shut down operations and scrap the remaining assets for $210,000. Yearly sales and COGS will be $2,080,000 and $775,000 respectively. Assume that the cost of equity is 12% and the tax rate 35 % . Calculate the project's NPV. Question 14Answer a. $104, 622.30 b. $93, 930.22 c. $1, 163,250.0 d. $ 102,589.04 e. Problem can't be calculated with information given.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education