The TinX Corp. is investing in a machine which will increase the quality of their product. The initial investment in the machine is $800,000. The life of the machine is 4 years. The machine will be depreciated using the straight-line method. The annual sales will be $400,000, the annual fixed cost will be $50,000, and the annual variable cost will be 10% of the sales. If the required rate of return is 12% and corporate tax rate is 30%, what is the net present value of the project. Calculate the net present value of the project. (A) The net present value of the project is $323,819.26 (B) The net present value of the project is $41,345.77 (C) The net present value of the project is -$465,891.57 (D) The net present value of the project is $141,578.30

The TinX Corp. is investing in a machine which will increase the quality of their product. The initial investment in the machine is $800,000. The life of the machine is 4 years. The machine will be depreciated using the straight-line method. The annual sales will be $400,000, the annual fixed cost will be $50,000, and the annual variable cost will be 10% of the sales. If the required rate of return is 12% and corporate tax rate is 30%, what is the net present value of the project. Calculate the net present value of the project. (A) The net present value of the project is $323,819.26 (B) The net present value of the project is $41,345.77 (C) The net present value of the project is -$465,891.57 (D) The net present value of the project is $141,578.30

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 13P

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