Management is considering purchasing an asset for 32000

Reference no: EM13599476

Management is considering purchasing an asset for $32,000 that would have a useful life of 4 years and no salvage value. For tax purposes, the entire original cost of the asset would be depreciated over 4 years using the straight-line method. The asset would generate annual net cash inflows of $23,000 throughout its useful life. The project would require additional working capital of $3,000, which would be released at the end of the project. The company's tax rate is 40% and its discount rate is 8%.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

What is the net present value of the asset? (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

Reference no: EM13599476

Questions Cloud

Dividends on common stock during year 2 totaled 43 : dividends on common stock during year 2 totaled 43 thousand. dividends on preferred stock totaled 10 thousand. the

Corporation has a sales budget for next month of 600000 : corporation has a sales budget for next month of 600000. cost of goods sold is expected to be 30 percent of sales. all

Alder company budgets on an annual basis the following : alder company budgets on an annual basis. the following beginning and ending inventory levels in units are planned for

Complete the companys flexible budget performance report : tajiri corporation uses customers served as its measure of activity. the following report compares the planning budget

Management is considering purchasing an asset for 32000 : management is considering purchasing an asset for 32000 that would have a useful life of 4 years and no salvage value.

Ventura corporation purchased machinery on january 1 2009 : ventura corporation purchased machinery on january 1 2009 for 630000. the company used the sum-of-the-years-digits

Actual production costs for the production of 1000 stuffed : woods enterprises prepared the following standard costs for production of one stuffed bear direct materials 1.5 pounds

The company on 123107 pays the fourth interest payment on : please tell me the journal entries for the following1 on 1107 hawkeye issues 500000 of ten 10 year 9 coupon bonds

There are two different restaurant chains that you have : there are two different restaurant chains that you have identified as potential investment opportunities. you are

User Account

All Pages