Mullica Industries is considering a new 5-year expansion project that requires a

Question

Mullica Industries is considering a new 5-year expansion project that requires an initial fixed asset investment of $2.484 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worthless. The project is estimated to generate $2,208,000 in annual sales, with costs of $883,200. The tax rate is 32 percent and the required return on the project is 12 percent. What is the net present value for this project? please show work
Answer

$1,638,408

$1,533,627

$1,433,059

$1,336,486

$1,243,702

Explanation / Answer

$1,433,059

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