Answered: Calculate the NPV of this project.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Eggz, Inc., is considering the purchase of new equipment that will allow the company to collect loose hen feathers for sale. The equipment will cost $435,000 and will be eligible for 100 percent bonus depreciation. The equipment can be sold for $51,000 at the end of the project in 5 years. Sales would be $283,000 per year, with annual fixed costs of $49,000 and variable costs equal to 36 percent of sales. The project would require an investment of $29,000 in NWC that would be returned at the end of the project. The tax rate is 22 percent and the required return is 9 percent.

Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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What are the cell #s in the NPV formula?

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