FITCO is considering the purchase of new equipment. The equipment costs $350,000, and an additional $110,000 is
Question:
FITCO is considering the purchase of new equipment. The equipment costs $350,000, and an additional $110,000 is needed to install it. The equipment will be depreciated straight-line to zero over a five-year life. The equipment will generate additional annual revenues of $265,000, and it will have annual cash operating expenses of $83,000. The equipment will be sold for $85,000 after five years.
An inventory investment of $73,000 is required during the life of the investment. FITCO has a marginal tax rate of 28 percent, and its cost of capital is 10 percent. What is the project NPV?
a. $97,449.
b. $144,723.
c. $162,767.
d. $231,371.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781119795438
5th Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Question Posted: