Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Esfandairi Enterprises is considering a new three-year expansion project that requires an
initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight-
line to zero over its three-year tax life, after which time it will be worthless. The project is
estimated to generate $1,785,000 in annual sales, with costs of $695,000. The tax rate is
25 percent and the required return on the project is 12 percent. What is the project's
NPV? (Do not round intermediate calculations. Enter your answer in dollars, not
millions of dollars, and round your answer to 2 decimal places, e.g., 1,234,567.89.)
NPV
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Transcribed Image Text:Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.31 million. The fixed asset will be depreciated straight- line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $1,785,000 in annual sales, with costs of $695,000. The tax rate is 25 percent and the required return on the project is 12 percent. What is the project's NPV? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, and round your answer to 2 decimal places, e.g., 1,234,567.89.) NPV
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