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Gateway Communications is considering a project with an initial fixed assets cost of $1.69 million that...

Gateway Communications is considering a project with an initial fixed assets cost of $1.69 million that 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 $230,000. The project will not change sales but will reduce operating costs by $382,500 per year. The tax rate is 40 percent and the required return is 10.5 percent. The project will require $47,000 in net working capital, which will be recouped when the project ends. What is the project's NPV?

a) $113,015

b) $147,835

c) $118,152

d) $153,748

e) $158,873

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jeff jeffy answered 1 year ago
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