Question

You are considering a project that will require an initial cost of $8,000. Revenues for the...

You are considering a project that will require an initial cost of $8,000. Revenues for the 5 year life of the project are expected to be $7,000 each year and costs (including taxes) are expected to be $2,000 each year. If the WACC is 14%, what is the NPV of the project?

-$3,614

$6,145

$7,487

$9,165

$25,165
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option D - $9,165

Calculations:

If you have any questions, please post in comments box. If you like the answer. please rate it

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are considering a project that will require an initial outlay of $54,200. This project has...
You are considering a project that will require an initial outlay of $54,200. This project has an expected life of 5 years and will generate after-tax flows to the company as a whole of $20,608 at the end of each year over its 5-year life. In addition to the $20, 608 cash flow from operations during the fifth and final year, there will be an additional cash outflow of $23,608 at the end of the fifth and final year associated...
You are considering a 3-year project with an initial cost of $434,000. The project will not...
You are considering a 3-year project with an initial cost of $434,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $62,000 (before tax). The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories...
You are considering a 3-year project with an initial cost of $626,000. The project will not...
You are considering a 3-year project with an initial cost of $626,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $33,000 (before tax). The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories...
You are considering the following project. What is the NPV of the project? Project life: 3...
You are considering the following project. What is the NPV of the project? Project life: 3 years Equipment:      Cost: $18,000      Economic life: 3 years      Salvage value: $4,000 Initial investment in net working capital: $2,000 Revenue: $13,000 in year 1, with a nominal growth rate of 5% per year Fixed cost: $3,000 in year 1 Variable cost: 30% of revenue Corporate tax rate (T): 40% WACC for the project: 10% This project does not create incidental effect.
You are considering a 3-year project with an initial cost of $738,000. The project will not...
You are considering a 3-year project with an initial cost of $738,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $48,000. The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories at its...
A company is considering the following investment opportunities: Project A Initial cost = $5,500,000 Expected life...
A company is considering the following investment opportunities: Project A Initial cost = $5,500,000 Expected life = 10 yrs NPV = $340,000 IRR = 20% Project B Initial cost = $3,000,000 Expected life = 10 yrs NPV = $300,000 IRR = 30% Project C Initial cost = $2,000,000 Expected life = 10 yrs NPV = $200,000 IRR = 40% If the company has a WACC of 15% and the company is using capital rationing with a fixed capital budget of...
You are considering a 3-year project with an initial cost of $626,000. The project will not...
You are considering a 3-year project with an initial cost of $626,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $33,000 (before tax). The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories...
You are considering a 3-year project with an initial cost of $414,000. The project will not...
You are considering a 3-year project with an initial cost of $414,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $43,000 (before tax). The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories...
You are considering a 3-year project with an initial cost of $592,000. The project will not...
You are considering a 3-year project with an initial cost of $592,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $45,000 (before tax). The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories...
Konyvkiado Inc. is considering two mutually exclusive projects. Both require an initial investment of $15,000 at...
Konyvkiado Inc. is considering two mutually exclusive projects. Both require an initial investment of $15,000 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of $7,000 and $12,000 at the end of Years 1 and 2, respectively. In addition, Project S can be repeated at the end of Year 2 with no changes in its cash flows. Project L has an expected life of 4 years and a cash-flow of $5200/year. Each...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT