Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bing enterprises, INC. has been considering the purchase of a new manufacturing facility for $ 2 8 4 , 0 0 0 . The facility

Bing enterprises, INC. has been considering the purchase of a new manufacturing facility for $284,000. The facility is to be depreciated on a straight-mine basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $119,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 4 percent. Production costs at the end of the first year will be $44,000, in nominal terms, and they are expected to increase at 5 percent per year. The real discount rate is 7 percent. The corporate tax rate is 24 percent.
Calculate the NPV of the project. (do not round intermediate calculations and round your answer 2 decimal places, e.g.32.16.)
NPV is 31,233.82
I tried using this on my study program and it says the answer is in corrcet .
What is the NPV actually suppose be?

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

Finance Operations

Authors: Charles Finley

1st Edition

1491292423, 978-1491292426

More Books

Students also viewed these Finance questions

Question

7. Understand the challenges of multilingualism.

Answered: 1 week ago

Question

5. Give examples of variations in contextual rules.

Answered: 1 week ago