Homework Help is Here – Start Your Trial Now!
Business
Finance
STM Inc. is considering a 3-year project with an initial cost of $825,590. The project will n produce sales but will reduce operating costs by $299,174 a year. The equipment is depred straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $70,892. The tax rate is 34%. The project will requ $29.612 in extra inventory for spare parts and accessories STM requires a 8% rate of retur

STM Inc. is considering a 3-year project with an initial cost of $825,590. The project will n produce sales but will reduce operating costs by $299,174 a year. The equipment is depred straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $70,892. The tax rate is 34%. The project will requ $29.612 in extra inventory for spare parts and accessories STM requires a 8% rate of retur

Essentials Of Investments
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
See similar textbooks
icon
Related questions
Question

Kk.216.

 

STM Inc. is considering a 3-year project with an initial cost of $825,590. The project will not directly produce sales but will reduce operating costs by $299,174 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $70,892. The tax rate is 34%. The project will require $29,612 in extra inventory for spare parts and accessories. STM requires a 8% rate of return. What is the NPV of the project? Round your response to the nearest dollar and input without the $ sign.
Transcribed Image Text:STM Inc. is considering a 3-year project with an initial cost of $825,590. The project will not directly produce sales but will reduce operating costs by $299,174 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $70,892. The tax rate is 34%. The project will require $29,612 in extra inventory for spare parts and accessories. STM requires a 8% rate of return. What is the NPV of the project? Round your response to the nearest dollar and input without the $ sign.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
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
SEE MORE TEXTBOOKS