Question

In: Finance

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $835,000.00 work cell. Further, it will cost the firm $51,000.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $51,100.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,900.00. Finally, the firm will invest $10,100.00 in net working capital to ensure the project has sufficient resources to be successful.

The project will generate annual sales of $900,000.00 with expenses estimated at 40.00% of sales. Net working capital will be held constant throughout the project. The tax rate is 37.00%.

The work cell is estimated to have a market value of $479,000.00 at the end of the fourth year. The firm expects to reclaim 89.00% of the final NWC position.

The cost of capital is 14.00%.

What is the NPV the project if we end the project after 4 years?

Solutions

Expert Solution


Related Solutions

ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $772,200.00 work cell. Further, it will cost the firm $57,200.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $58,400.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $796,900.00 work cell. Further, it will cost the firm $57,100.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $58,400.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $833,800.00 work cell. Further, it will cost the firm $53,200.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $74,800.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $833,800.00 work cell. Further, it will cost the firm $53,200.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $74,800.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $835,200.00 work cell. Further, it will cost the firm $53,700.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $64,800.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $814,500.00 work cell. Further, it will cost the firm $55,000.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $50,000.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $813,800.00 work cell. Further, it will cost the firm $58,800.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $64,100.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $837,700.00 work cell. Further, it will cost the firm $59,400.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $73,500.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $837,700.00 work cell. Further, it will cost the firm $59,400.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $73,500.00. The project will also use a piece of equipment the firm...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The...
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $755,800.00 work cell. Further, it will cost the firm $51,300.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20-year useful life. The project will require new employees to be trained at a cost of $68,100.00. The project will also use a piece of equipment the firm...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT