Keiper, Inc., is considering a new three-year expansion project that requires an
ID: 2622432 • Letter: K
Question
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.85 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,130,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $350,000, and the fixed asset will have a market value of $235,000 at the end of the project.
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.85 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,130,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $350,000, and the fixed asset will have a market value of $235,000 at the end of the project.
Explanation / Answer
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.85 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,130,000 in annual sales, with costs of $815,000. The project requires an initial investment in net working capital of $350,000, and the fixed asset will have a market value of $235,000 at the end of the project.
If the tax rate is 34 percent, what is the project
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