Question
Phone Home, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of RM3 million. The fixed asset will be
Phone Home, Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of RM3 million. The fixed asset will be depreciated straight-line to zero over its 4-year tax life, after which time it will have a market value of RM231,000. The project requires an initial investment in net working capital of RM330,000, all of which will be recovered at the end of the project. The project is estimated to generate RM2,640,000 in annual sales, with costs of RM1,056,000. The tax rate is 31 percent and the required return for the project is 15 percent. What is the net present value for this project? 2 points
RM714,056
RM733,970
RM741,335
RM742,208
RM744,595
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