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Question
Gateway Communications is considering a project with an initial fixed asset cost of $2.168 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. Ignore bonus depreciation. At the end of the project the equipment will be sold for an estimated $495,000. The project will not directly produce any sales but will reduce operating costs by $634,000 a year. The tax rate is 21 percent. The project will require $128,000 of net working capital which will be recouped when the project ends. What is the net present value at the required rate of return of 14.3 percent?
A) $668,019.24
B) $701,414.14
C) $652,108.10
D) $570,475.57
E) $657,345.35
Answer
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Related questions
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Q:
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B) general partnerships.
C) limited partnerships.
D) corporations.
E) limited liability companies.
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Q:
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B) growth rate of the firm.
C) gross profit per unit produced.
D) market value per share of outstanding stock.
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Q:
A partnership with four general partners:
A) distributes profits based on percentage of ownership.
B) has an unlimited partnership life.
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D) limits each partner's personal liability to 25 percent of the partnership's total debt.
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Q:
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B) the partner's active participation in the firm's activities.
C) the lack of any potential financial loss.
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Which one of the following statements concerning a sole proprietorship is correct?
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B) The profits of a sole proprietorship are subject to double taxation.
C) The owner of a sole proprietorship is personally responsible for all of the company's debts.
D) There are very few sole proprietorships remaining in the U.S. today.
E) A sole proprietorship is structured the same as a limited liability company.
Q:
Which one of the following questions is least likely to be addressed by financial managers?
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C) Should the firm borrow more money?
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E) How much cash should the firm keep on hand?
Q:
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B) whether or not to purchase a new machine for the production line.
C) how to refinance a debt issue that is maturing.
D) how much inventory to keep on hand.
E) how much money should be kept in the checking account.
Q:
The date on which a shareholder is officially listed as the recipient of stock rights is called the:
A) issue date.
B) offer date.
C) declaration date.
D) holder-of-record date.
E) ex-rights date.