Question
Dunder-Mifflin is considering opening a new branch in Columbia with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a
Dunder-Mifflin is considering opening a new branch in Columbia with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $300,000. The project will not directly produce any sales but will reduce operating costs by $725,000 a year. The tax rate is 35 percent. The project will require $45,000 of inventory which will be recouped when the project ends. What is the NPV of this project if the firm requires a 10.73 percent rate of return? Enter the dollar amount as an integer value (ex. -$5,000.45 as -5000 or +$3,450.70 as 3451).
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