XYZ is considering a project that would last for 3 years and have a cost of capital of 18.20 percent. The relevant level of net working capital for the project is expected to be $2,020.30 immediately (at year 0); $4,790.00 in 1 year; $14,000.00 in 2 years; and $0.00 in 3 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. The tax rate is 54.90 percent. What is the net present value of this project?. Year 0 Year 1 Year 2 Year 3 $12,500.00 $10,400.00 $12,100.00 Revenue $ 0.00 Costs $ 0.00 $3,990.00 $3,980.00 $3,500.00 Depreciation $ 0.00 $2,200.00 $2,250.00 $2,100.00 Cash flows from capital spending $-5,910.00 $1,350.00 $ 20.00 $3,770.00 O $7794.24 (plus or minus $10) $580.25 (plus or minus $10) O $5323.60 (plus or minus $10) O $10279.59 (plus or minus $10) None of the above is within $10 of the correct answer

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PB: Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated...
icon
Related questions
Question
100%
XYZ is considering a project that would last for 3 years and have a cost of capital of 18.20 percent. The relevant level of net working capital for the
project is expected to be $2,020.30 immediately (at year 0); $4,790.00 in 1 year; $14,000.00 in 2 years; and $0.00 in 3 years. Relevant expected
revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. The tax rate is 54.90
percent. What is the net present value of this project? .
Year 0
Revenue
$
Year 1 Year 2 Year 3
$12,500.00 $10,400.00 $12,100.00
$3,990.00 $3,980.00 $3,500.00
$2,200.00 $2,250.00 $2,100.00
0.00
$ 0.00
0.00
Costs
Depreciation
$
Cash flows from capital spending $-5,910.00 $1,350.00 $ 20.00
$3,770.00
$7794.24 (plus or minus $10)
$580.25 (plus or minus $10)
$5323.60 (plus or minus $10)
$10279.59 (plus or minus $10)
None of the above is within $10 of the correct answer
Transcribed Image Text:XYZ is considering a project that would last for 3 years and have a cost of capital of 18.20 percent. The relevant level of net working capital for the project is expected to be $2,020.30 immediately (at year 0); $4,790.00 in 1 year; $14,000.00 in 2 years; and $0.00 in 3 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. The tax rate is 54.90 percent. What is the net present value of this project? . Year 0 Revenue $ Year 1 Year 2 Year 3 $12,500.00 $10,400.00 $12,100.00 $3,990.00 $3,980.00 $3,500.00 $2,200.00 $2,250.00 $2,100.00 0.00 $ 0.00 0.00 Costs Depreciation $ Cash flows from capital spending $-5,910.00 $1,350.00 $ 20.00 $3,770.00 $7794.24 (plus or minus $10) $580.25 (plus or minus $10) $5323.60 (plus or minus $10) $10279.59 (plus or minus $10) None of the above is within $10 of the correct answer
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,