You plan to purchase a new gas chromatograph for your

Assignment Help Corporate Finance

Reference no: EM13380995

You plan to purchase a new gas chromatograph for your company's food-product development lab. The machine will cost $300,000 plus $20,000 shipping and installation costs, all of which may be depreciated. Operating the chromatograph will require an inventory of reagents and standards which will cost $10,000 (working capital). This inventory will be sold at the end of four (4) years for $10,000 along with the chromatograph which will be sold at the end of four (4) years for $90,000. The chromatograph will generate revenues of $100,000 per year for the four years. You plan to depreciate the equipment to a book value of zero (0) over the four years using the straight-line method. Assuming that your cost of capital is 11% and that your tax rate is 35%, calculate the NPV of this project.

a. NPV = $3,650.52 IRR = 11.47%

Reference no: EM13380995

Questions Cloud

Electronics communications technology investment : electronics communications technology investment development ltd. co. elcoms forerunner was set up in 1995. in 2003 the

Q1 veezee vz issues a 2-year floating rate bond in the : q1. veezee vz issues a 2-year floating rate bond in the amount of 100m on which it pays libor6 - 0.5 semi-annually.

The research paper assignment is worth 220 points or 22 of : the research paper assignment is worth 220 points or 22 of the course grade.a grade of c or better is required as per

Temple corp is considering a new project whose data are : temple corp. is considering a new project whose data are shown below. the equipment that would be used has a 3-year tax

You plan to purchase a new gas chromatograph for your : you plan to purchase a new gas chromatograph for your companys food-product development lab. the machine will cost

In addition to your regular job for the last three years : in addition to your regular job for the last three years you have operated your own business as a crocodile wrestler

Project y is estimated to cost 9000000 to start and will : project y is estimated to cost 9000000 to start and will generate 2800000 pre-tax income annually for 5 years with the

Problem 1a firm just paid a dividend of 2 and the growth : problem 1a firm just paid a dividend of 2 and the growth rates are forecasted to be 3 in the first period and then 2

Consider a 6-year coupon bond with 4 annual coupons and a : consider a 6-year coupon bond with 4 annual coupons and a 1000 face value. how much will the price of the bond change

User Account

All Pages