Considering investing in project that increases annual costs

Assignment Help Financial Management

Reference no: EM13939377

You are considering investing in a project that increases annual costs by 25,000 per year over the projects 5 year life. The project has an initial cost of 500,000 and will be depreciated straight line over 5 years to a salvage value of 0. Assume a 34% tax bracket and a discount rate of 11%. What is the NPV of this project?

Reference no: EM13939377

Questions Cloud

Discuss convertibles and warrants : Discuss Convertibles and Warrants. Would convertibles and warrants influence your decision to buy or not buy an investment? Give an example.

Present value of tax benefits from depreciation : Your company is considering a new project that will require $825,000 of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $141,000 using straight-line depreciat..

What is conversion value of each convertible bond at year : Frye Inc. is considering raising the new capital through issuing convertible bonds which will be sold at par, carry a coupon rate of 6% - annually paid, have 20-year maturity, and can be converted into 23 shares of stock. The bonds would be non calla..

Describe the cultural factors that influence sexual attitude : Compare the similarities and differences of sexual attitudes and behaviors in each culture. Describe the cultural factors that influence sexual attitudes and behaviors. Explain how sexual attitudes and behaviors are perceived and displayed within eac..

Considering investing in project that increases annual costs : You are considering investing in a project that increases annual costs by 25,000 per year over the projects 5 year life. The project has an initial cost of 500,000 and will be depreciated straight line over 5 years to a salvage value of 0. Assume a 3..

The conversion value exceeds the call price : Central Food Brokers is considering issuing a 20-year convertible bond that will be priced at its par value of $1,000 per bond. The bonds have a 12 percent annual coupon interest rate, and each bond could be converted into 30 shares of common stock. ..

Share after tax salvage value if the machine is sold : Lion's share inc just bought a 3 million dollar machine that will be depreciated over its 10 year life using straight line depreciation. The marginal tax rate is 40%. What is Lion Share's after tax salvage value if the machine is sold in year 8 for 4..

What is share after tax salvage value : Lion's share Inc. just bought a 2.5 million machine that will be depreciated over its 15 year life using straight line depreciation. The marginal tax rate is 35%. What is Lion's share after tax salvage value if the machine is sold in year 7 for 1.75 ..

What is the operating cash flow for the project in year : You are evaluating a project for The Tiff-any golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Tiff-any to be $430 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in ..

User Account

All Pages