Question

In: Finance

Adelphia Communications Corporation will require the purchase of $695,000 in new equipment. The company expects to...

Adelphia Communications Corporation will require the purchase of $695,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $248,000. Initial net working capital equal to 31.00% of sales will be required. All of the net working capital will be recovered at the end of the project. The firm requires a 9.50% return on similar investments. The tax rate is 35%, and the project life is 5 years. There are no other operating expenses. Assume the present value of the CCA tax shield is $114,000. What is the project's NPV?

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

An industry will require the purchase of $675,000 in new equipment. The company expects to sell...
An industry will require the purchase of $675,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $240,000. Initial net working capital equal to 30.00% of sales will be required. All of the net working capital will be recovered at the end of the project. The firm requires a 9.00%...
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $695,000...
Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $695,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $191,000 at the end of the project. The project requires $61,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $164,600 a year. What is the net...
Your company is considering a project which will require the purchase of $685,000 in new equipment....
Your company is considering a project which will require the purchase of $685,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $244,000. Initial net working capital equal to 30.50% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $715,000 in new equipment....
Your company is considering a project which will require the purchase of $715,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $256,000. Initial net working capital equal to 32.00% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $725,000 in new equipment....
Your company is considering a project which will require the purchase of $725,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $260,000. Initial net working capital equal to 32.50% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $805,000 in new equipment....
Your company is considering a project which will require the purchase of $805,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $292,000. Initial net working capital equal to 36.50% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $775,000 in new equipment....
Your company is considering a project which will require the purchase of $775,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $280,000. Initial net working capital equal to 35.00% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $785,000 in new equipment....
Your company is considering a project which will require the purchase of $785,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $284,000. Initial net working capital equal to 35.50% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $825,000 in new equipment....
Your company is considering a project which will require the purchase of $825,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $300,000. Initial net working capital equal to 37.50% of sales will be required. All of the net working capital will be recovered at the end of the project....
Your company is considering a project which will require the purchase of $775,000 in new equipment....
Your company is considering a project which will require the purchase of $775,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $280,000. Initial net working capital equal to 35.00% of sales will be required. All of the net working capital will be recovered at the end of the project....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT