Question

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 the project. The corporate tax rate is 25 and the project has a required return of 14 percent. What is the NPV of the project? |

Answer #1

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...

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...

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 $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...

Simmons, Inc., is considering a new 4-year project that requires
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...

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 2.38
million.The fixed asset qualifies for 100 percent bonus
depreciation in the first year. The project is estimated to
generate 1,805,000 in annual sales, with costs of 696,000. The
project requires an initial investment in net working capital of
444,000, and the fixed asset will have a market value of 465,000 at
the end of the project.
a. If the tax rate is...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.52
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life and is estimated to have a market
value of $294584 at the end of the project. The project is
estimated to generate $2146553 in annual sales, with costs of
$809789. The project requires an initial investment in net working
capital of $360133. If the tax rate is...

Quad Enterprises is considering a new three-year expansion
project that requires an initial fixed asset investment of $2.67
million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life and is estimated to have a market
value of $297260 at the end of the project. The project is
estimated to generate $2043001 in annual sales, with costs of
$843186. The project requires an initial investment in net working
capital of $374861. If the tax rate is...

Keiper, Inc., is considering a new three-year expansion project
that requires an initial fixed asset investment of $2.7 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 $2,080,000 in annual sales, with
costs of $775,000. The tax rate is 35 percent and the required
return on the project is 12 percent. What is the project’s NPV?

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