Keiper, Inc., is considering a new three-year expansion project that requires an
ID: 2650618 • Letter: K
Question
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,040,000 in annual sales, with costs of $735,000. The tax rate is 34 percent and the required return on the project is 15 percent. What is the project’s NPV? (Round your answer to 2 decimal places. (e.g., 32.16))
NPV
An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,120,000 and will be sold for $1,320,000 at the end of the project. If the tax rate is 34 percent, what is the aftertax salvage value of the asset? Refer to Table 10.7. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
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Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.58 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,040,000 in annual sales, with costs of $735,000. The tax rate is 34 percent and the required return on the project is 15 percent. What is the project’s NPV? (Round your answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
What is the project
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