Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $999,231. The fixed asset will be depreciated straight-line to 61,255 over its 3-year tax life, after which time it will have a market value of $86,244. The project requires an initial investment in net working capital of $79,054. The project is estimated to generate $177,510 in annual sales, with costs of $92,903. The tax rate is 0.39 and the required return on the project is 0.09. What is the aftertax salvage value in year 3? (Make sure you enter the number with the appropriate +/- sign)

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $999,231. The fixed asset will be depreciated straight-line to 61,255 over its 3-year tax life, after which time it will have a market value of $86,244. The project requires an initial investment in net working capital of $79,054. The project is estimated to generate $177,510 in annual sales, with costs of $92,903. The tax rate is 0.39 and the required return on the project is 0.09. What is the aftertax salvage value in year 3? (Make sure you enter the number with the appropriate +/- sign)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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