Requires initial installed equipment cost

Assignment Help Financial Management
Reference no: EM131549537

A company is considering a 3-year project that requires an initial installed equipment cost of $9,000. The project engineer has estimated that the operating cash flows will be $4,000 in year 1, $5,000 in year 2, and $8,000 in year 3. The new machine will also require a parts inventory of $1,000 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 $6,000 at the end of the project. If the tax rate is 34% 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: EM131549537

Questions Cloud

Opens new product line and requires an initial outlay : A company is considering a 5-year project that opens a new product line and requires an initial outlay of $75,000.
What is cash break-even point : Assume depreciation is calculated using stright-line down to zero salvage value. If the required rate of return is 10% per year, what is cash break-even point
Outline a new possible customer base for chatime : Outline a new possible customer base for Chatime. What changes do you think Chatime would need to make sure that following
What is the correlation analysis : Assuming that I am interested in the relationship between Graduate Records Examinations (GRE) scores and GPAs from a large number of graduate students.
Requires initial installed equipment cost : A company is considering a 3-year project that requires an initial installed equipment cost of $9,000.. What is the net present value (NPV) of this project?
Era of unprecedented conglomeration : The Telecommunications Act of 1996 deregulated the industry and ushered in an era of unprecedented conglomeration.
Evaluat the different types of writing advice : This unit, in theIntroductionsthread, we will begin to get to know each other. There, you are asked to provide a metaphor or analogy.
Pirated from the internet or other sources : Some products can be used to break laws. For example, DVD and CD burners can be used to make illegal copies of movies and music pirated from the internet.
Explain accuracy vs precision when dealing with numbers : Discuss each set of data or result (compare to known/expected results). Explain accuracy vs precision when dealing with numbers.

Reviews

Write a Review

Financial Management Questions & Answers

  The interest rate on three-month treasury securities

If the newspaper reported that the interest rates on 10-year Treasury securities was 5 percent and the interest rate on three-month Treasury securities was 6 percent, would it be a good time to invest in the stock market? Explain your reasoning?

  What is the minimum rate of return

You bought a stock last year that grows by 10% every year. You decide that you will both hold onto that stock for another year and sell it, or you will sell it now and buy a different stock. If you are taxed 40% on half (50%) of the profit you make, ..

  About change in the value of the british pound

What must the CFO have expected about change in the value of the British pound over the year to believe in March, 2016

  1 the roe ratio tells us how much investors are willing to

1. the roe ratio tells us how much investors are willing to pay for a dollar of accounting book value. in general

  Utilize all of methods discussed in the case to value shares

As of February 2010, what is your assessment of the worth of Wal-Mart’s Stock? Utilize all of the methods discussed in the case to value the shares,

  Greener pastures investment decision

Business relocation is a big investment decision for a company. Assume that you are in a management role.

  How much money must you deposit in account each year

You are saving for the college education of your four children. They are one year apart in age; one will begin college in 8 years (Year 8), another in 9 years, another in 10 years and the last one in 11 years. The annual interest rate is 6 percent. H..

  Once observation is identified by internal auditor

Once an observation is identified by an internal auditor as a fraudulent act committed by senior mgt. resulting in an amount considered insignificant and trivial, it should be: reported to senior management. reported to the independent outside audito..

  What is the impact based on these facts to biolsi

What is the impact based on these facts to Biolsi, Donna and Ashley?

  Describe the three primary ways of incorporating dividends

How is the volatility of the underlying stock reflected in the binomial model?- Describe the three primary ways of incorporating dividends into the binomial model?

  An unlevered corporation has net income

An unlevered corporation has net income of $50,000 and a required rate of return of 14%. What would the value of this firm be if it borrowed $125,000 to buy back some of its stock? Assume a corporate tax rate of 35%. Show work

  What is the yield to maturity of bond

May Industries has a bond outstanding that sells for $783. The bond has a coupon rate of 8.20 percent and 16 years until maturity. What is the yield to maturity of the bond?

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