In: Finance
Dunder-Mifflin is considering opening a new branch in Columbia
with an initial fixed asset cost of $3.66 million which will be
depreciated straight-line to a zero book value over the 10-year
life of the project.
At the end of the project the equipment will be sold for an
estimated $300,000. The project will not directly produce any sales
but will reduce operating costs by $725,000 a year. The tax rate is
21 percent. The project will require $45,000 of inventory which
will be recouped when the project ends. What is the NPV of this
project if the firm requires a 15 percent rate of return? Enter the
dollar amount as an integer value (ex. -$5,000.45 as -5000 or
+$3,450.70 as 3451).
*please show work. thank you*