A firm is considering a new seven-year expansion project with an initial fixed asset investment of $3.8 million. The fixed asset will be depreciated straight-line to zero over its seven-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $2,278,000 in annual sales, with costs of $781,000. The tax rate is 27 percent and the required return is 6.2 percent. What is the net present value of this project? Instruction: Enter your response rounded to two decimal places.

A firm is considering a new seven-year expansion project with an initial fixed asset investment of $3.8 million. The fixed asset will be depreciated straight-line to zero over its seven-year tax life, after which time it will be worthless. No bonus depreciation will be taken. The project is estimated to generate $2,278,000 in annual sales, with costs of $781,000. The tax rate is 27 percent and the required return is 6.2 percent. What is the net present value of this project? Instruction: Enter your response rounded to two decimal places.

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Description: A firm is considering a new seven-year expansion project with an initial fixed asset investment of $3.8 million. The fixed asset will be depreciated straight-line to zero over its seven-year tax life,after which time it will be worthless. No bonus d

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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