Question
Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $157,000 and be depreciated on a 3-year MACRS and have no
Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $157,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $94,000, variable costs of $27,300, and fixed costs of $11,900. The project will also require net working capital of $2,500 that will be returned at the end of the project. The company has a tax rate of 21 percent and the project's required return is 8 percent. What is the net present value of this project?
Multiple Choice
$7,231
$8,793
$5,803
$6,331
$14,137
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