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Simon Corp is considering expanding. An outlay of $135 million is required for equipment for the expansion, and additional net working capital of $12 million
Simon Corp is considering expanding. An outlay of $135 million is required for equipment for the expansion, and additional net working capital of $12 million is required to support the expansion. The equipment will be depreciated on a straight-line basis to a zero book value over 8 years. Although the depreciable life is 8 years, the equipment is expected to have a productive life of 13 years, and it is expected to be sold at the end of its life for $16.2 million. Revenues minus expenses are expected to be $42.903 million per year for the life of the equipment. The corporation's marginal tax rate is 25% and the cost of capital for this investment is 9.5%. Compute the NPV of Simon's expansion. (In $millions with 3 decimals.) $ million
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