Question
In: Finance
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase in net working capital of $8,000. The project has a life of 20 years with an expected salvage value of $100,000. The project will be depreciated via simplified straight-line depreciation. Revenues are expected to increase by $120,000 per year and operating expenses by $14,000 per year. The firm's marginal tax rate is 40 percent and the cost of capital for this project is 12%. What is the net present value of this project? Round to the nearest penny. Do not include a dollar sign.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$800,000, which includes an increase in net working capital of
$8,000. The project has a life of 20 years with an expected salvage
value of $100,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$120,000 per year and operating expenses by $14,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 12%....
You are evaluating a capital project with a Net Investment of $800,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$800,000, which includes an increase in net working capital of
$8,000. The project has a life of 20 years with an expected salvage
value of $100,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$120,000 per year and operating expenses by $14,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 12%....
You are evaluating a capital project with a Net Investment of $400,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is 15%....
You are evaluating a capital project with a Net Investment of $400,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is 15%....
You are evaluating a capital project with a Net Investment of $95,000, which includes an increase...
You are evaluating a capital project with a Net Investment of
$95,000, which includes an increase in net working capital of
$5,000. The project has a life of 9 years with an expected salvage
value of $3,000. The project will be depreciated via simplified
straight-line depreciation. Revenues are expected to increase by
$20,000 per year and operating expenses by $4,000 per year. The
firm's marginal tax rate is 40 percent and the cost of capital for
this project is 8%....
1- You are evaluating a capital project with a Net Investment of $400,000, which includes an...
1- You are evaluating a capital project with a Net Investment of
$400,000, which includes an increase in net working capital of
$16,000. The project has a life of 12 years with an expected
salvage value of $3,000. The project will be depreciated via
simplified straight-line depreciation. Revenues are expected to
increase by $90,000 per year and operating expenses by $8,000 per
year. The firm's marginal tax rate is 40 percent and the cost of
capital for this project is...
Which methods of evaluating a capital investment project use cash flows as a measurement basis?
Which methods of evaluating a capital investment project use cash flows as a measurement basis? Net present value, accounting rate of return, and internal rate of return. Internal rate of return, payback period, and accounting rate of return. Accounting rate of return, net present value, and payback period. Payback period, internal rate of return, and net present value. Net present value, payback period, accounting rate of return, and internal rate of return.
KK Enterprises is evaluating a project with the following characteristics: Fixed capital investment is $2,000,000. The...
KK Enterprises is evaluating a project with the following
characteristics:
Fixed capital investment is $2,000,000.
The project has an expected six-year life.
The initial investment in net working capital is $200,000. At
the end of each year, net working capital must be increased so that
the cumulative investment in net working capital is one-sixth of
the next year’s projected sales.
The fixed capital is depreciated 30 percent in year 1, 35
percent in year 2, 20 percent in year 3,...
The capital budgeting director of Global Products, Inc. is evaluating a new project that would increase...
The capital budgeting director of Global Products, Inc. is
evaluating a new project that would increase revenues by $60,000
per year. Associated annual related expenses for this project are
estimated at $30,000. The projected cost of the project is $50,000.
The project anticipates the immediate need of $10,000 in net
operating working capital that should be recaptured at the end of
the project’s three-year life. The marginal tax rate is 21%. The
firm plans to depreciate the project using MACRS....
SafeElectrical is evaluating a project which will increase sales by $50,000 and costs by $30,000. The...
SafeElectrical is evaluating a project which will increase sales
by $50,000 and costs by $30,000. The project will cost $150,000 and
will be depreciated straight-line to a zero book value over the
10-year life of the project. The applicable tax rate is 34 percent.
Net working capital is zero. What is the annual cash flow for this
project?
$3,300
$17,900
$20,000
$18,300
$28,200
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