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NEED IN 1 HOUR!!!! suppose a firm is considering a capital budgeting project which requires upfront...

NEED IN 1 HOUR!!!!

suppose a firm is considering a capital budgeting project which requires upfront (Yr0) $3,000,000 investment in fixed assets and a $185,000 upfront investment in NWC. The firm expects to be able to sell the purchased fixed assets at the end of year 3 for $410,000. The fixed assets fall into the three year MACRS class. The company also expects to recover HALF of its upfront NWC investment at the end of year 3. The project supported by the new fixed assets is projected to generate $2,350,000 in annual revenues with annual variable and fixed operating expenses (including depreciation) of $810,000. The firm's applicable tax rate is 35%

(MACRS FACTORS FOR 3 YEAR CLASS ASSETS : YR1= .3333 YR2 =.445 YR3 = .1481 YR4 = .0741

QA - what annual depreciation deductions will the firm take using MACRS schedule?

QB - What is the book value of the fixed assets after year 3?

QC - What year 3 CF will be realized from sale of fixed assets?

QD - what are the annual CFs from this project?

QE - what is the net present value (NPV) of this project if the appropriate discount rate is 10%?

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Expert Solution

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

jeff jeffy answered 10 months ago
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