Expansion project-requires initial fixed asset investment

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Reference no: EM132004393

Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset falls into the 3-year MACRS class (MACRS Table) and will have a market value of $189,000 after 3 years. The project requires an initial investment in net working capital of $270,000. The project is estimated to generate $2,160,000 in annual sales, with costs of $864,000. The tax rate is 35 percent and the required return on the project is 17 percent.

Reference no: EM132004393

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