Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gateway Communications is considering a project with an initial fixed assets cost of $ 1 . 7 6 million that will be depreciated straight -

Gateway Communications is considering a project with an initial fixed assets cost of $1.76 million that 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 $234,000. The project will not change sales but will reduce operating costs by $384,500 per year. The tax rate is 34 percent and the required return is 10.9 percent. The project will require $49.000 in net working capital, which will be recouped when the project ends. What is the project's NPV?
A) $149,576
D) $155,559
C) $160.744
E) $117,989
B) $112,859
image text in transcribed

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

Corporate Financial Management

Authors: Glen Arnold, James Pickford

2nd Edition

0582821762, 978-0582821767

More Books

Students also viewed these Finance questions