Question
Hollister & Hollister is considering a new project. The project will require $535,000 for new fixed assets, $218,000 for additional inventory, and $39,000 for additional
Hollister & Hollister is considering a new project. The project will require $535,000 for new fixed assets, $218,000 for additional inventory, and $39,000 for additional accounts receivable. Short-term debt is expected to increase by $165,000. The project has a 6-year life. The fixed assets will be depreciated straight-line to a zero book value over the life of the project. At the end of the project, the fixed assets can be sold for 50 percent of their original cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of $875,000 and costs of $640,000. The tax rate is 35 percent and the required rate of return is 14 percent. What is the amount of the aftertax cash flow from the sale of the fixed assets at the end of this project?
Group of answer choices $173,875 $69,550 $73,830 $104,325 $240,750
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