Question
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $607,824. The fixed asset will be depreciated
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $607,824. The fixed asset will be depreciated straight-line to 73,634 over its 3-year tax life, after which time it will have a market value of $121,624. The project requires an initial investment in net working capital of $68,429. The project is estimated to generate $202,083 in annual sales, with costs of $90,385. The tax rate is 0.25 and the required return on the project is 0.1. What is the aftertax salvage value (SVNOT) in year 3 (Make sure you enter the number with the appropriate +/- sign)
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