Finding the net present value in given case

Reference no: EM132013845

Question: A new factory at Arcata requires an initial outlay of $3.85 million to be paid immediately. The factory will last for eight additional years, after which it can be sold for a salvage value of $2,400,000. Sales will be $800,000 during the first year of operation and will grow at a rate of 9 percent a year after that. Variable costs will be 30 percent of sales and fixed costs will be $150,000 and grow at a rate of 5% per year. All costs are in cash. Assume cash flows occur at year-end. At a 6 percent required return. (Ignore taxes) The net present value of this project and is __________.

Reference no: EM132013845

Questions Cloud

How many colonists were indentured or limited : Were people able to leave after they arrived? How many colonists were indentured or limited?

What is the merger premium per share : New England Fisheries (NEF) has 18,000 shares outstanding at a market price per share of $14. Maryland Fish Markets (MFM) has 7,000 shares outstanding.

What are thoughts of prohibition : What are your thoughts of Prohibition, and was Prohibition worth it overall?

How world war 1 changed the economic : Have examples to explain how the war affected the people, government power, and the economy.

Finding the net present value in given case : A new factory at Arcata requires an initial outlay of $3.85 million to be paid immediately. The factory will last for eight additional years.

Show the proper balance sheet presentation for the liability : Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2015, balance sheet

Tell the story of a defining moment that drove you : Write narrative essay that questions/explores your choice to pursue your chosen career pathway .

What tax issues should michael and his son consider : Michael Jr., contributes $10,000 cash for the remaining 25 Miller shares. What tax issues should Michael and his son consider with respect to stock acquisition

How should new financial advisor getting appointments set up : How should a new financial advisor getting the appointments set up with prospects when out prospecting. Like the steps to follow to get the client to meet.

User Account

All Pages