Calculate the NPV of the project

Assignment Help Financial Accounting
Reference no: EM132838480

Question - A project requires an initial capital outlay of $90,000 and an initial investment in working capital of $10,000 (at t= 0). You expect the project to produce sales revenue of $120,000 per year for three years. You estimate manufacturing costs at 60% of revenues. (Assume all revenues and costs occur at year-end [i.e., t=1, t=2, and t=3]). The equipment depreciates using straight-line depreciation over three years. At the end of the project, the firm can sell the equipment for $10,000 and also recover the investment in net working capital. The corporate tax rate is 21% and the cost of capital is 12%. Calculate the NPV of the project

A. $12,873

B. $18,950

C. $42,660

D. $8,443

E. ($2,735)

Reference no: EM132838480

Questions Cloud

Locate two different hoteling software programs : Locate two different Hoteling software programs. Screenshot or screen snip their home pages (crop out what I don't need to see from your desktop).
Explain the validity of information you placed in brochure : In a 250-300 word reflection, discuss why it is important to have information related to developmental milestones for oral communication available for parents.
What potential accounting complexities does a company avoid : What potential accounting complexities (and costs) does a company avoid when it acquires another company that does not qualify as a business?
What is the annual nominal rate of interest : What is the annual NOMINAL rate (APR) of interest that you would be paying if you decided to agree to make the 18 monthly payments?
Calculate the NPV of the project : A project requires an initial capital outlay of $90,000 and an initial investment in working capital of $10,000 (at t= 0). Calculate the NPV of the project
What is the accounting treatment for the loss contingency : What is the accounting treatment for this loss contingency. In the case of litigation, what would you want to know to prepare the books for asset changes?
Restrictions imposed and maintained only on select countries : Would it make a difference if, for example, restrictions were imposed and maintained only on select countries - Refer to GATT article XI, XX, XXI
Identify activities in regards to health policy research : Identify their activities in regards to health policy research. Identify if any political affiliations, biases or potential conflicts of interest
Evaluate which force is the strongest and why : Analyze how each of The Five Forces affects the organization and how each force may affect the ones. Evaluate which force is the strongest and why.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd