Depreciated on straight-line basis to zero balance

Assignment Help Financial Management

Reference no: EM131552389

PulseAudio Co. is considering expanding its studio. They would need new equipment that costs 350,000 that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project. The estimated pre-tax salvage value is 62,000. the project requires 35,000 initially for net working capital, all of which will be recouped atht he end of the project. The projected operating cash flow is 187,500 a year. What is the net present value of this project if the relevant discount rate is 15 percent and the tax rate is 35 percent.

Reference no: EM131552389

Questions Cloud

Should the new lease be accepted : At what nominal WACC would the store owner be indifferent between the two leases? Should the new lease be accepted?

What is the intrinsc price of the stock : What is the intrinsc price of the stock if the growth is constant and the stock's required rate of return is 10%?

Capital budgeting criteria-ethical considerations : Capital budgeting criteria: ethical considerations An electric utility is considering a new power plant in northern Arizona.

What are the projects irrs assuming the wacc : What are the projects' NPVs assuming the WACC is 5%? What are the projects' IRRs assuming the WACC is 5%?

Depreciated on straight-line basis to zero balance : They would need new equipment that costs 350,000 that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project.

Formal agreement between bank and borrower : A compensating balance is: A formal agreement between a bank and a borrower indicating the maximum pre-arranged credit the bank will extend to borrower is:

What transaction should you do : You hold a stock portfolio worth $15 million with a beta of 1.05. What transaction should you do?

Utilizing the discounted cash flow framework : Assuming a before-tax equity yield requirement of 12%, price (or value) this property on BTCF basis utilizing the Discounted Cash Flow framework.

Creation of portfolio is very important to diversification : The creation of a portfolio is very important to diversification to anyone including corporations.

User Account

All Pages