(Cakulathg NPV Doublemeat Palace is considerng a new plant for a temporary customer, and its finance department has determined the folowing characterisfics. The company ownis much of the plant and equipment to be used tor the product. This equipment was ceignaly purchased for $90,000, however, if the project is not undertaken, this equipment will be scid for $50,000 anfer tanes, in addion, it the project is not accepted, the plact used for the project could be sold for $85,000 after tames - the plant originally cost $40,000. The rest of the equipment will need to be purchased at a cost of $100,000. This new equipment will be depeeciated by the straghtine method ever the project's 3-year lfe, affer which it will have zoro salvage value. No change in net operating working capital would be required, and management expects revenues rosuling from this new propect is be $200.000 per yoar for 3 yoars, while increased operating expenses, excluding depreciation, are expected to be 384,000 per year over the project's 3-year the. The average tax rate is 25 percent and the marginal tax rate is 32 percent. The required rate of return for this project is 13 percent. What is the projects Nev? a. What is the initial outlay associated whth this propect? 1 (Round to the nearest dotlar.) b. What are the anriual aftertax cash foos associased with this project for years 1 and 2 (nole that the cash flowi for years 1 and 2 are equal)? (Aound to the nearest dollar) c. What is the terminal cach fow in yea 3 (afal is the annual attor-tax cash fow in year 3 plus ary additional cash flows assoelued with the terminaton of the project)? (Round to the nearest doltar.) d. What is the proiects NPV given a requied rate of retuen of 13 percens? (Round to the nearest dollar.) (Cakulathg NPV Doublemeat Palace is considerng a new plant for a temporary customer, and its finance department has determined the folowing characterisfics. The company ownis much of the plant and equipment to be used tor the product. This equipment was ceignaly purchased for $90,000, however, if the project is not undertaken, this equipment will be scid for $50,000 anfer tanes, in addion, it the project is not accepted, the plact used for the project could be sold for $85,000 after tames - the plant originally cost $40,000. The rest of the equipment will need to be purchased at a cost of $100,000. This new equipment will be depeeciated by the straghtine method ever the project's 3-year lfe, affer which it will have zoro salvage value. No change in net operating working capital would be required, and management expects revenues rosuling from this new propect is be $200.000 per yoar for 3 yoars, while increased operating expenses, excluding depreciation, are expected to be 384,000 per year over the project's 3-year the. The average tax rate is 25 percent and the marginal tax rate is 32 percent. The required rate of return for this project is 13 percent. What is the projects Nev? a. What is the initial outlay associated whth this propect? 1 (Round to the nearest dotlar.) b. What are the anriual aftertax cash foos associased with this project for years 1 and 2 (nole that the cash flowi for years 1 and 2 are equal)? (Aound to the nearest dollar) c. What is the terminal cach fow in yea 3 (afal is the annual attor-tax cash fow in year 3 plus ary additional cash flows assoelued with the terminaton of the project)? (Round to the nearest doltar.) d. What is the proiects NPV given a requied rate of retuen of 13 percens? (Round to the nearest dollar.)
