Calculate the npv of the project

Assignment Help Finance Basics

Reference no: EM132077505

Question: Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $274,000. the facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $109,000, in nominal terms, at the end of the first year. the revenues are expected to increase at the inflation rate of 4 percent. Production costs at the end of the first year will be $34,000, in nominal terms, and they are expected to increase at 5 percent per year. the real discount rate is 7 percent. the corporate tax rate is 39 percent. Sanders has other ongoing profitable operations.

Calculate the NPV of the project. (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16))

Should the company accept the project?

Reference no: EM132077505

Questions Cloud

What is the strength of the magnetic field : The plane of a circle of radius 10 cm. If the magnetic flux through this circle is 50 Wb, what is the strength of the magnetic field

Is the world inherently complex as the young adults sing : Are there key issues that significantly impact on complexity, as Stephen Hayes and Daniel Bennett write?

What amount of gain or loss is recognized by sam : Sam owns 100% of M Corporation's single class of stock. Sam transfers land and a building having a $30,000 and $100,000 adjusted basis, respectively.

Expected rate of return on the stock : With a beta of 1.9 and expected rate of return of 28%. If the market return this year turns out to be 12 percentage points under expectations

Calculate the npv of the project : Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $274,000. the facility is to be fully depreciated.

Devise a plan for the hotel to monitor and control process : MGT656 : Using process mapping and reviewing the information here, present the new processes for check-in and checkout to management.

What is the post money valuation : Now if I am raising 200,000 USD for 20% what is the pre money valuation and what is the post money valuation.

What is the bid price of a 10000 face value : What is the bid price of a 10000 face value t bill with a bid rate of 2.35 percent if there are 50, 100, 250 days to maturity?

Does auto shop take priority over the bank lien on the car : Sam borrows $4,120 from a bank to finance a car. The bank has a security interest in a car and it is perfected by filing. The car is taken for repairs.

User Account

All Pages