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Sextet Corporation is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million. The fixed asset is classified as a five-year asset under MACRS and will be depreciated straight-line to zero over the three-year project life for book accounting. At the end of the project, Sextet believes the asset can be sold for $300,000. The project is estimated to generate $2,160,000 in annual sales, with annual costs of $855,000. Net working capital for the project is expected to be $425,000. The tax rate is 34 percent and the required return on the project is 10 percent.
What is the project’s NPV? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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Consider the decision you might have to make if you won a state lottery worth $105 million. Which would you choose: a lump-sum payment of %54 million today or a payment of $3.5 million each year for the next 30 years? At what opportunity cost would y..
On 3 August 2011 Ross Creek Ltd declared and paid a dividend of $10000 from profits earned prior to its acquisition by Sebastopol Ltd. The directors consider that the value of the investment in Ross Creek Ltd has been impaired and have adjusted the p..
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