Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $795,400.00 work

image text in transcribed

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $795,400.00 work cell. Further, it will cost the firm $51,400.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $66,700.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $5,000.00. Finally, the firm will invest $11,700.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $904,000.00 with expenses estimated at 36.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 39.00%. The work cell is estimated to have a market value of $460,000.00 at the end of the fourth year. The firm expects to reclaim 81.00% of the final NWC position. The cost of capital is 14.00%. What is the NPV the project if we end the project after 4 years? Answer format: Currency: Round to: 2 decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ziglar On Selling The Ultimate Handbook For The Complete Sales Professional

Authors: Zig Ziglar

1st Edition

0785288937, 978-0785288930

More Books

Students also viewed these Finance questions

Question

What is Working Capital ? Explain its types.

Answered: 1 week ago

Question

1. Identify three communication approaches to identity.

Answered: 1 week ago

Question

d. Who are important leaders and heroes of the group?

Answered: 1 week ago

Question

3. Describe phases of minority identity development.

Answered: 1 week ago