Question

XZ Inc. is considering a three-year project. The initial investment on the fixed asset will be $900,000. Fixed asset will be depreciated using straight-line method to zero over the life of the project. The net working capital investment will be $250,000. The project is estimated to generate $500,000 in annual sales, with cost of $150,000. Assume the tax rate is 34% and required return is 8%, what is the NPV of this project?

Answer #1

XYZ Inc. is considering a three-year project. The initial
investment on the fixed asset will be $900,000. Fixed asset will be
depreciated using straight-line method to zero over the life of the
project. The net working capital investment will be $250,000. The
project is estimated to generate $500,000 in annual sales, with
cost of $150,000. Assume the tax rate is 34% and required return is
10%, what is the NPV of this project?
Group of answer choices
$302,570
$170,518
-$321,878

XYZ Inc. is considering a three-year project. The initial
investment on the fixed asset will be $900,000. Fixed asset will be
depreciated using straight-line method to zero over the life of the
project. The net working capital investment will be $250,000. The
project is estimated to generate $500,000 in annual sales, with
cost of $150,000. Assume the tax rate is 34% and required return is
10%, what is the NPV of this project?
Group of answer choices
$302,570
$170,518
-$321,878

XY Inc. is considering a three-year project. The initial
investment on the fixed asset will be $90,000. Fixed asset will be
depreciated using straight-line method to zero over the life of the
project. The net working capital investment will be $50,000. The
project is estimated to generate $200,000 in annual sales, with
cost of $150,000. Assume the tax rate is 35% and required return is
10%, what is the NPV of this project?
$-33,065
$30,971
$15,428

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