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 $780,900.00 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 $780,900.00 work cell. Further, it will cost the firm $50,500.00 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 $62,400.00. 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 $6,800.00. Finally, the firm will invest $11.200.00 in net working capital to ensure the project has sufficient resources to be successful The project will generate annual sales of S905,000.00 with expenses estimated at 40.00% of sales Net working capital will be held constant throughout the project. The tax rate is 37.00% The work cell is estimated to have a market value of $472,000.00 at the end of the fourth year. The firm expects to reclaim 84.00% of the final NWC position The cost of capital is 13.00% What is the NPV the project if we end the project after 4 years? Submit 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

Step: 3

blur-text-image

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

Financial Innovation Regulation And Crises In History

Authors: Harold James

1st Edition

0367669528, 978-0367669522

More Books

Students also viewed these Finance questions