Question
Year 0 Year 1 Year 2 Year 3 Revenue 900000 900000 900000 Cost of Goods Sold -320000 -320000 -320000 Gross Profit 580000 580000 580000 Selling,
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Revenue | 900000 | 900000 | 900000 | |
| Cost of Goods Sold |
| -320000 | -320000 | -320000 |
| Gross Profit |
| 580000 | 580000 | 580000 |
| Selling, General and Admin |
| -105000 | -105000 | -105000 |
| Depreciation |
| -200000 | -200000 | -200000 |
| EBIT | 275000 | 275000 | 275000 | |
| Income tax (35%) |
| -96250 | -96250 | -96250 |
| Incremental Earnings | 178750 | 178750 | 178750 | |
|
| ||||
| Capital Purchaes | -600,000 | |||
| Change to NWC | -12,000 | -12,000 | -12,000 |
Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the data above. If the cost of capital is
8%, what is the net present value (NPV) of this project?
A. $366,301
B. $407,001
C. $-386,651
D. $447,701
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Fundamentals Of Investments Valuation And Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
9th Edition
1260013979, 9781260013979
