Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $589,470. 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 $589,470. The fixed asset will be depreciated straight-line to 49,818 over its 3-year tax life, after which time it will have a market value of $127,923. The project requires an initial investment in net working capital of $78,305. The project is estimated to generate $202,660 in annual sales, with costs of $134,742. The tax rate is 0.24 and the required return on the project is 0.14 . What is the aftertax salvage value in year 3? (Make sure you enter the number with the appropriate +/sign) Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $589,470. The fixed asset will be depreciated straight-line to 49,818 over its 3-year tax life, after which time it will have a market value of $127,923. The project requires an initial investment in net working capital of $78,305. The project is estimated to generate $202,660 in annual sales, with costs of $134,742. The tax rate is 0.24 and the required return on the project is 0.14 . What is the aftertax salvage value in year 3? (Make sure you enter the number with the appropriate +/sign)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started