Gateway Communications is considering a project with an initial fixed assets cost of $1.69 million that 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 will be sold for an estimated $227,000. The project will not change sales but will reduce operating costs by $381,000 per year. The tax rate is 23 percent and the required return is 10.2 percent. The project will require $45,500 in net working capital, which will be recouped when the project ends. What is the project's NPV? Multiple Choice 0 O $371,951 $430,108 $400.224 O $355,779 $416,233
Gateway Communications is considering a project with an initial fixed assets cost of $1.69 million that 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 will be sold for an estimated $227,000. The project will not change sales but will reduce operating costs by $381,000 per year. The tax rate is 23 percent and the required return is 10.2 percent. The project will require $45,500 in net working capital, which will be recouped when the project ends. What is the project's NPV? Multiple Choice 0 O $371,951 $430,108 $400.224 O $355,779 $416,233
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 2CMA: Staten Corporation is considering two mutually exclusive projects. Both require an initial outlay of...
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