Question

Bourque Enterprises is considering a new project. The project will generate sales of $1.6 million, $2 million, $1.9 million, and $1.4 million over the next four years, respectively. The fixed assets required for the project will cost $1.5 million and will be eligible for 100 percent bonus depreciation. At the end of the project, the fixed assets can be sold for $175,000. Variable costs will be 30 percent of sales and fixed costs will be $400,000 per year. The project will require NWC equal to 15 percent of sales that must be accumulated in the year prior to sales. The required return on the project is 11 and the tax rate is 21 percent. |

What is the NPV of the project? |

Answer #1

Bourque Enterprises is considering a new project. The project
will generate sales of $1.7 million, $2.4 million, $2.3 million,
and $1.8 million over the next four years, respectively. The fixed
assets required for the project will cost $2.2 million and will be
eligible for 100 percent bonus depreciation. At the end of the
project, the fixed assets can be sold for $160,000. Variable costs
will be 20 percent of sales and fixed costs will be $550,000 per
year. The project...

Simmons, Inc., is considering a new 4-year project that requires
an initial fixed asset investment of $2.85 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 $400,000. The
project is expected to generate $2.65 million in annual sales, with
annual expenses of $915,000. The project will require an initial
investment of $450,000 in NWC that will be returned at the end of...

Simmons, Inc., is considering a new 4-year project that requires
an initial fixed asset investment of $3.55 million. The fixed asset
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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...

Simmons, Inc., is considering a new 4-year project that requires
an initial fixed asset investment of $2.7 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 $385,000. The
project is expected to generate $2.5 million in annual sales, with
annual expenses of $900,000. The project will require an initial
investment of $435,000 in NWC that will be returned at the end of...

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an initial fixed asset investment of $3.65 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 $460,000. The
project is expected to generate $3.25 million in annual sales, with
annual expenses of $975,000. The project will require an initial
investment of $510,000 in NWC that will be returned at the end of...

Simmons, Inc., is considering a new 4-year project that requires
an initial fixed asset investment of $3.6 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 $455,000. The
project is expected to generate $3.2 million in annual sales, with
annual expenses of $970,000. The project will require an initial
investment of $505,000 in NWC that will be returned at the end of...

Simmons, Inc., is considering a new 4-year project that requires
an initial fixed asset investment of $2.75 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 $390,000. The
project is expected to generate $2.55 million in annual sales, with
annual expenses of $905,000. The project will require an initial
investment of $440,000 in NWC that will be returned at the end of...

H. Cochran Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.34
million. The fixed asset qualifies for 100 percent bonus
depreciation in the first year. The project is estimated to
generate $1,740,000 in annual sales, with costs of $644,000. The
project requires an initial investment in net working capital of
$310,000, and the fixed asset will have a market value of $270,000
at the end of the project.
a. If the tax...

Quad enterprises is considering a new three year
expansion project that requires an initial fixed asset investment
of 2.32 million. The fixex assest qualifies for 100 percent bonus
depreciation in the first year.
The project is estimated to generate $1.735 million in annual sales
with costs of $650,000. The project requires an initial investment
in net working capital of $250,000 and the fixed asset will have a
market value of $180,000 at the end of the project. The tax rate...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.43
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which time it will be
worthless. The project is estimated to generate $1,990,000 in
annual sales, with costs of $685,000. The tax rate is 30 percent
and the required return on the project is 18 percent.
What is the project’s NPV?
(Enter your answer in dollars,...

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