Question
Welti Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate 7% Tax rate 30% Expected life of the project 4
Welti Corporation has provided the following information concerning a capital budgeting project: |
After-tax discount rate | 7% |
Tax rate | 30% |
Expected life of the project | 4 |
Investment required in equipment | $144,000 |
Salvage value of equipment | $0 |
Annual sales | $330,000 |
Annual cash operating expenses | $235,000 |
The company uses straight-line depreciation on all equipment; the annual depreciation expense will be $36,000. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes into account in its capital budgeting. |
The net present value of the project is closest to: (Round discount factor(s) to 3 decimal places, do not round intermediate calculations and round final answer to the nearest dollar amount.) |
$165,200
$78,545
$261,815
$117,815
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