What is the value of the npv for project

Assignment Help Finance Basics
Reference no: EM133073494

Thurston Petroleum is considering a new project that complements its existing business. The machine required for the project costs $4.6 million. The marketing department predicts that sales related to the project will be $2.75 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated to zero over its 4-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 30 percent of sales. The company also needs to add net working capital of $200,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The tax rate is 25 percent and the required return for the project is 11 percent.

What is the value of the NPV for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)

Should the company proceed with the project? Yes or No

Reference no: EM133073494

Questions Cloud

Positively correlated in terms of priced movement : 1. Which of the following types of security is most likely
What is the four year forward price : A stock provides dividend of $1 at the end of the first, second, and third year, its spot price is $30 and the risk-free rate for all maturities (with continuou
Is revenue recognize the contract : The cost of these gadgets was $17,000. Is revenue recognize in 2018 b/c the contract and the sale amount is known
Post to the stockholders equity accounts : Oritz Corporation is authorized to issue both preferred and common stock. The par value of the preferred is $50. Post to the stockholders equity accounts
What is the value of the npv for project : Thurston Petroleum is considering a new project that complements its existing business. The machine required for the project costs $4.6 million. The marketing d
Explain what better than expected earnings means : Banks posted better than expected earnings. Explain what better than expected earnings means and how stocks react to such news.
Loans value to run the bank and sucure funding : They are review a loan application for the ACME Products Corporation. ACME wants to borrow $10 million. The risk management department informs the line manager
What amount is reported for interest expense : On January 1, 2019, Timbersaw Co. issued 9% bonds with a face value of $700,000 for $656,992 to yield 10%. What amount is reported for interest expense
Current price of stock : Given this information and using the Banko growth model. determine what the current price of this stock should be

Reviews

Write a Review

Finance Basics Questions & Answers

  What must have the sample size been

Furthermore, you are told that the probability of getting a sample proportion of this size or smaller is 14%. What must have the sample size been?

  Valuing a troubled firm-fcff approach

LIS Corporation, an environmental service provider, had revenues of $209 million in 2002 and reported losses of $3.1 million.

  What is the price of the bond

The current required rate of return is 5%. What is the price of the bond? Need formula and answer

  Define expected annual incremental after-tax free cash flows

A beauty product company is developing a new fragrance named Happy Forever. There is a probability of 0.46 that consumers will love Happy Forever.

  Capital budgeting and capital structure

Capital Budgeting and Capital Structure

  Review the case of liability management at general motors

Liability Management at General Motors (Harvard Business School Case 293123-PDF-ENG). The case studies issues related to managing the liability structure.

  The project has the same risk as necs existing businesses

national electric company nec is considering a 49 million project in its power systems division. tom edison the

  Calculate the data point

a)The z-score that corresponds to a particular data point (x) is 1.42. Calculate the data point. Give your answer to 2 decimal places.

  The dividend is expected to grow at constant rate of 7

thomas brothers is expected to pay a 0.50 per share dividend at the end of the year i.e. d1 0.50. the dividend is

  Find the japanese cost of capital

Find the Japanese cost of capital to compute the dollar-denominated NPV of this project.

  What is the quarterly payment

What is the quarterly payment? What is the total interest in year three? What is the total principal paid in year two?

  What is the magnitude of maximum loss

If a person buys a $110 call and writes a $90 call, what is the magnitude of her maximum loss? Please answer correctly up to two decimal places.

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