Question
In: Finance
Red Royal Recycling is considering a project that would last for 2 years. The project would...
Red Royal Recycling is considering a project that would last for 2 years. The project would involve an initial investment of 104,000 dollars for new equipment that would be sold for an expected price of 104,000 dollars at the end of the project in 2 years. The equipment would be depreciated to 27,000 dollars over 7 years using straight-line depreciation. In years 1 and 2, relevant annual revenue for the project is expected to be 91,000 dollars per year and relevant annual costs for the project are expected to be 40,000 dollars per year. The tax rate is 50 percent and the cost of capital for the project is 9.96 percent. What is the net present value of the project?
Solutions
Expert Solution
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -
jeff jeffy answered 2 years agoRelated Solutions
Red Royal Recycling is considering a project that would last for 2 years. The project would...
Red Royal Recycling is considering a project that would last for
2 years. The project would involve an initial investment of 104,000
dollars for new equipment that would be sold for an expected price
of 104,000 dollars at the end of the project in 2 years. The
equipment would be depreciated to 27,000 dollars over 7 years using
straight-line depreciation. In years 1 and 2, relevant annual
revenue for the project is expected to be 91,000 dollars per year
and...
White Mountain Packaging is considering a project that would last for 2 years. The project would...
White Mountain Packaging is considering a project that would
last for 2 years. The project would involve an initial investment
of 195,000 dollars for new equipment that would be sold for an
expected price of 168,000 dollars at the end of the project in 2
years. The equipment would be depreciated to 27,000 dollars over 7
years using straight-line depreciation. In years 1 and 2, relevant
annual revenue for the project is expected to be 170,000 dollars
per year and...
ndigo River Entertainment is considering a project that would last for 2 years. The project would...
ndigo River Entertainment is considering a project that would
last for 2 years. The project would involve an initial investment
of 79,000 dollars for new equipment that would be sold for an
expected price of 65,000 dollars at the end of the project in 2
years. The equipment would be depreciated to 23,000 dollars over 4
years using straight-line depreciation. In years 1 and 2, relevant
annual revenue for the project is expected to be 77,000 dollars per
year and...
White Mountain Industrial is considering a project that would last for 2 years. The project would...
White Mountain Industrial is considering a project that would
last for 2 years. The project would involve an initial investment
of 107,000 dollars for new equipment that would be sold for an
expected price of 78,000 dollars at the end of the project in 2
years. The equipment would be depreciated to 19,000 dollars over 4
years using straight-line depreciation. In years 1 and 2, relevant
annual revenue for the project is expected to be 104,000 dollars
per year and...
Yellow Sand Consulting is considering a project that would last for 2 years. The project would...
Yellow Sand Consulting is considering a project that would last
for 2 years. The project would involve an initial investment of
93,000 dollars for new equipment that would be sold for an expected
price of 78,000 dollars at the end of the project in 2 years. The
equipment would be depreciated to 23,000 dollars over 7 years using
straight-line depreciation. In years 1 and 2, relevant annual
revenue for the project is expected to be 90,000 dollars per year
and...
Blue Eagle Technology is considering a project that would last for 2 years. The project would...
Blue Eagle Technology is considering a project that would last
for 2 years. The project would involve an initial investment of
149,000 dollars for new equipment that would be sold for an
expected price of 134,000 dollars at the end of the project in 2
years. The equipment would be depreciated to 21,000 dollars over 8
years using straight-line depreciation. In years 1 and 2, relevant
annual revenue for the project is expected to be 136,000 dollars
per year and...
Blue Eagle Technology is considering a project that would last for 2 years. The project would...
Blue Eagle Technology is considering a project that would last
for 2 years. The project would involve an initial investment of
92,000 dollars for new equipment that would be sold for an expected
price of 78,000 dollars at the end of the project in 2 years. The
equipment would be depreciated to 20,000 dollars over 4 years using
straight-line depreciation. In years 1 and 2, relevant annual
revenue for the project is expected to be 80,000 dollars per year
and...
Silver Sun Media is considering a project that would last for 2 years. The project would...
Silver Sun Media is considering a project that would last for 2
years. The project would involve an initial investment of 104,000
dollars for new equipment that would be sold for an expected price
of 84,000 dollars at the end of the project in 2 years. The
equipment would be depreciated to 24,000 dollars over 4 years using
straight-line depreciation. In years 1 and 2, relevant annual
revenue for the project is expected to be 85,000 dollars per year
and...
Green Forest Technology is considering a project that would last for 2 years. The project would...
Green Forest Technology is considering a project that would last
for 2 years. The project would involve an initial investment of
76,000 dollars for new equipment that would be sold for an expected
price of 77,000 dollars at the end of the project in 2 years. The
equipment would be depreciated to 22,000 dollars over 6 years using
straight-line depreciation. In years 1 and 2, relevant annual
revenue for the project is expected to be 65,000 dollars per year
and...
Orange Valley Shipping is considering a project that would last for 2 years. The project would...
Orange Valley Shipping is considering a project that would last
for 2 years. The project would involve an initial investment of
84,000 dollars for new equipment that would be sold for an expected
price of 76,000 dollars at the end of the project in 2 years. The
equipment would be depreciated to 24,000 dollars over 6 years using
straight-line depreciation. In years 1 and 2, relevant annual
revenue for the project is expected to be 73,000 dollars per year
and...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Form groups of three or four people, and appoint one member as the spokesperson who will...
- JAVA If a user inputs a specific number of rows, columns and sections for a rectangle...
- A stock costs $80 and pays a $4 dividend each year for three years. a) If...
- A solid cylinder, mass of 15 kg, is on a hill that is inclined at a...
- Discuss the difference between a)FAT, FAT32, NTFS, CDFS, etc., b)What make them diferent and why they...
- 2. Given the Instruction sets for Machine-1, Machine-2 and Machine-3, write programs to calculate: P= ((B×C)...
- Problem III. Suppose that, in a market of a certain good, there are firms that are...
ADVERTISEMENT