Estimate that the equipment can be sold as salvage

Assignment Help Finance Basics

Reference no: EM131957983

Question: A company is considering a 3-year project that requires an initial installed equipment cost of $11,000. The project engineer has estimated that the operating cash flows will be $4,000 in year 1, $6,000 in year 2, and $9,000 in year 3. The new machine will also require a parts inventory of $3,000 at the beginning of the project (assume this inventory can be sold for cost at the end of the project). It is also estimated that the equipment can be sold as salvage for an after tax salvage cash flow of $5,000 at the end of the project. If the tax rate is 28% and the required rate of return is 13%, what is the net present value (NPV) of this project? (Answer to the nearest dollar.)

Reference no: EM131957983

Questions Cloud

What will be the loan balance at the end of year three : A reverse mortgage is made with a balance not to exceed $300,000 on a property now valued at $700,000. What will be the loan balance at the end of year 3?

Estimate the present value of the tax benefits : Your Company is considering a new project that will require $990,000 of new equipment at the start of the project. The equipment will have a depreciable.

Evaluate the project using the IRR method : Your company is considering a project which requires a $30,000 initial investment with a predicted salvage value at the end of its six year useful life.

What is the OFC and final analysis : The company is considering operating a new driving range facility in Sanford, fl. In order to do so, they will need to purchase a ball dispensing machine.

Estimate that the equipment can be sold as salvage : A company is considering a 3-year project that requires an initial installed equipment cost of $11,000. The project engineer has estimated that the operating.

What level of pretax cost savings-MACRS schedule : A proposed cost-saving device has an installed cost of $830,000. What level of pretax cost savings do we require for this project to be profitable?

How can management eliminate or reduce agency cost : How can management eliminate or reduce this agency cost? How might management eliminate this agency cost?

Calculate the price of bond : Assuming annual coupon payments, calculate the price of the bond.

Calculate the present value of these cash flows : Calculate the present value of these cash flows using a 13 percent discount rate.

User Account

All Pages