Question
Mountain Sounds Corp. is evaluating a cost savings project. The project's expected operational life is seven years. The project will save the firm $209,282 in
Mountain Sounds Corp. is evaluating a cost savings project. The project's expected operational life is seven years. The project will save the firm $209,282 in net working capital, a one time savings for the life of the project. The project will require an investment in capital equipment of $5,642,797 and has an expected after-tax salvage value of $813,234. After considering the cash savings and depreciation impact the firm expects the project to generate operating cash flows of $1,003,275 each year for the life of the project. What is the NPV of the project if the firm's WACC is 10.6%?
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