Question

Simmons, Inc., is considering a new 4-year project that requires an initial fixed asset investment of $3.55 million. The fixed asset is eligible for 100 percent bonus depreciation in the first year. At the end of the project, the asset can be sold for $450,000. The project is expected to generate $3.15 million in annual sales, with annual expenses of $965,000. The project will require an initial investment of $500,000 in NWC that will be returned at the end of the project. The corporate tax rate is 24 and the project has a required return of 13 percent.

What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1