What is the net present value of this project

Assignment Help Financial Management

Reference no: EM13938354

Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment is scrapped. The project will increase pre-tax revenues to the firm by $725,000 a year. The tax rate is 35 percent. If the firm requires a 14 percent rate of return what is the Net Present Value of this project?

The NPV is -$172,937.49.

The NPV is $387,516.67

The NPV is $251,860.34

The NPV is -$87,820.48.

The NPV is $447,202.05

Reference no: EM13938354

Questions Cloud

What-if analysis and problem optimisation : Perform a what-if analysis to determine the maximum total profit that could be achieved if only rye (no wheat) is planted, given the cost and time constraints.

Statement that declares and stores the elements : Write a statement that declares and stores the elements of the following array into a vector object:

Project is an extension of the firms current operations : Antonio's is analyzing a project with an initial cost of $42,000 and cash inflows of $26,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. The firm uses only debt a..

Take public transportation : When you drive, rather than walk or take public transportation, you incur social costs such as ________. Painting the outside of your house and planting a garden in your front yard are _________ to your neighbors. The invisible hand is generally asso..

What is the net present value of this project : Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment is scrapped. ..

Articulate the meaning of value-added service : 1. Articulate the meaning of value-added service as it pertains to patient care services, and argue the major reasons why it matters to add value to patient services. Justify your response.

What is your estimate of the contribution margin ratio : Assume that the selling price per ticket is $25.Based on your answer to part a, what is your estimate of the contribution margin ratio at Madrigal Theater?

Investigating two mutually exclusive investment projects : As a financial analyst for a large firm you are investigating two mutually exclusive investment projects for the firm, project A and project B. After your analysis you find that the IRRA>IRRB, but that the NPVA

Business problem statement : The table of contents for the Course Project proposal: Subject of Course Project Business problem statement Name of the company or organization

User Account

All Pages