(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $2,000,000 per year for each of the next 9 years. In year 9 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $1.2 million. Thus, in year 9 the investment cash inflow totals $3,200,000. Calculate the project's NPV using a discount rate of 6 percent. CO If the discount rate is 6 percent, then the project's NPV is $ (Round to the nearest dollar)
(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $2,000,000 per year for each of the next 9 years. In year 9 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $1.2 million. Thus, in year 9 the investment cash inflow totals $3,200,000. Calculate the project's NPV using a discount rate of 6 percent. CO If the discount rate is 6 percent, then the project's NPV is $ (Round to the nearest dollar)
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 12P
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![(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The
expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced
costs of operations equal to $2,000,000 per year for each of the next 9 years. In year 9 the firm will also get back a cash flow equal to the
salvage value of the equipment, which is valued at $1.2 million. Thus, in year 9 the investment cash inflow totals $3,200,000. Calculate
the project's NPV using a discount rate of 6 percent
If the discount rate is 6 percent, then the project's NPV is S
m
(Round to the nearest dollar.).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9a5c0f21-e210-4317-8570-94f3bfbd28e5%2Fefdf2cfd-2d26-46e2-84d0-a021220abbe5%2Fgx9qmsj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The
expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced
costs of operations equal to $2,000,000 per year for each of the next 9 years. In year 9 the firm will also get back a cash flow equal to the
salvage value of the equipment, which is valued at $1.2 million. Thus, in year 9 the investment cash inflow totals $3,200,000. Calculate
the project's NPV using a discount rate of 6 percent
If the discount rate is 6 percent, then the project's NPV is S
m
(Round to the nearest dollar.).
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