Explain project evaluation through npv

Reference no: EM1313784

Explain Project evaluation through NPV

Swannee Resorts is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight line method over the project's 3 year life, and would have zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? If you are working this problem by hand rather than by computer, ignore small rounding differences between your answer and the choices given. (Hint: Cash flows are constant in years 1-3.)

WACC 10%

Net investment cost (depreciable basis) $65,000

Sales revenues $70,000

Operating costs excl. dip's $25,000

Tax Rate 35%
a) $22,156.24
b) $23,791.14
c) $24,354.87
d) $25,189.71
e) $26,599.05

Reference no: EM1313784

Questions Cloud

Setting up null hypothesis for associated f test : Set up null hypothesis for associated F test.

Balance sheet and income statement using financial ratios : Determine the approximate amounts for the current year's balances in the form of a balance sheet and income statement using financial ratios.

The gas generated cost of electricity equal to the cost : suppose that O&M costs (staff, maintenance, decommissioning, waste handling, training, refurbishment reserve and other charges) can be approximated by 12% of the debt charge and the fuel costs for the ACR's enriched fuel is about 3 percent of the deb..

Implications of bankruptcy on lenders : Explain why Brownstown's management was reluctant to release this information to its lenders.

Explain project evaluation through npv : Explain Project evaluation through NPV and ignore small rounding differences between your answer and the choices given

Ratio analysis and analysis from ratios : Ratio analysis and analysis from ratios and Financial Statements Analysis

Explanation of whether insurance premiums : Life insurance companies require applicants to submit to a physical examination as proof of insurability prior to issuing standard life insurance policies.

unemployment rate affect your chances of finding a job : Explain how does a rise in the unemployment rate affect your chances of finding a job which would match your qualifications as a college graduate.

What is the orientation angle of the second polarizer : Compute the distance of two point's p1 and p2 in the x-y plane with the following Cartesian coordinates: p1= (-5m, +8m), p2= (+3m, +2m). Draw the position vectors into appropriate-points.

User Account

All Pages