Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by $409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when the project ends. What is the project's NPV? Multiple Choice $127,831 $133,641 C $169,560 $176,342 $182,220
Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by $409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when the project ends. What is the project's NPV? Multiple Choice $127,831 $133,641 C $169,560 $176,342 $182,220
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 16P: Shao Airlines is considering the purchase of two alternative planes. Plane A has an expected life of...
Question
4.
![Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year
life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by
$409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when
the project ends. What is the project's NPV?
Multiple Choice
$127,831
$133,641
C
$169,560
$176,342
$182,220](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F902e7e06-dd9d-47fe-961b-7a721406cdf1%2Fde8ba066-f565-4ba6-9a4a-81f5396698f7%2Ftricmfk_processed.png&w=3840&q=75)
Transcribed Image Text:Gateway Communications is considering a project with an initial fixed assets cost of $1.50 million that will be depreciated straight-line to a zero book value over the 9-year
life of the project. At the end of the project the equipment will be sold for an estimated $245,000. The project will not change sales but will reduce operating costs by
$409,000 per year. The tax rate is 40 percent and the required return is 12.7 percent. The project will require $54,500 in net working capital, which will be recouped when
the project ends. What is the project's NPV?
Multiple Choice
$127,831
$133,641
C
$169,560
$176,342
$182,220
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