Fixed asset will be depreciated straight-line to zero

Assignment Help Financial Management
Reference no: EM13878678

Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.67 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,070,000 in annual sales, with costs of $765,000. The tax rate is 34 percent and the required return on the project is 13 percent. What is the project’s NPV?

Reference no: EM13878678

Questions Cloud

Examine practical value of contingency theory of management : Identify, and discuss the significance of, such contingent variables and examine the practical value of the contingency theory of management accounting.
What costs and benefits of taking course in microeconomics : What are the costs and benefits of taking this course in microeconomics? Develop a theory of how much a student can be expected to study for this course. How might the student's current employment status affect his or her studying time?
Summarize ritzer definition of control : Ritzer argues that with McDonaldization, technologies, including "machines and tools, materials, skills, knowledge, rules, regulations, procedures, and techniques" (p. 89), control us. Without using direct quotes, summarize Ritzer's definition of ..
How does culture affect organizational change? : How does culture affect organizational change?
Fixed asset will be depreciated straight-line to zero : Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.67 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wort..
What you think the company might have done to prevent : What you think the company might have done to prevent this, or lessen the impact What you learned about the Foreign Corrupt Practices Act.
Identify the main features of the budgetary system : Identify the main features of the budgetary system outlined above. Comment on any advantages and disadvantages that may exist in respect of the features you have identified.
How to improve the power quality with harmonic filters : How to improve the power quality with harmonic filters ?
Alternative internal control : a. What type of internal control is provided in this example? Why is some form of internal control needed in this case?

Reviews

Write a Review

Financial Management Questions & Answers

  Seniority-based pay system or a merit-based pay system

Assume you work for an old established company with a traditionally based pay system. Would you rather have a seniority-based pay system or a merit-based pay system and explain why?

  What is the estimated required rate of return

Woidtke Manufacturing's stock currently sells for $30 a share. The stock just paid a dividend of $2.00 a share (i.e., D0 = $2.00), and the dividend is expected to grow forever at a constant rate of 7% a year. What stock price is expected 1 year from ..

  Lower weighted average cost of capital

In general, the cost of debt capital is lower than the cost of equity capital. For this reason, it might be expected that firms with high debt ratios would have a lower weighted average cost of capital. Explain at least one reason why this is not the..

  Cash accounting measures the deficit

Suppose that the Consumer Price Index fell by 4% between this year and last year while the price of a typical automobile fell by 3%. Cash accounting is easier to implement in practice than is capital accounting. Cash accounting measures the deficit a..

  What are the floatation costs for issuing preferred share

The preferred stock of Gator Industries sells for $34.63 and pays $2.77 per year in dividends. What is the cost of preferred stock financing?  What are the floatation costs for issuing the preferred share and how should this cost be incorporated into..

  Calculate the utilization-efficiency and productivity

The operations manager creates an 8 hour shift with a 30 minute lunch and two 10 minute breaks, one in the morning and one in the afternoon. With personal bathroom and other breaks, such as stretching, the manager feels the workers actually put in 7 ..

  Bonds issued by modern kitchens pay semi annually

The 7 percent bonds issued by Modern Kitchens pay semi annually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $1,032. What is the yield to maturity?

  Taxpayers recognized gain and the basis for the bonds

Sue receives stock as a gift from his uncle. The adjusted basis of the stock is $10,000 and the fair market value is $17,000. The taxpayer trades the stock for bonds with a fair market value of $15,000 and $2,000 cash. What is the taxpayer's recogniz..

  Yield to maturity and future price

A bond has a $1,000 par value, 7 years to maturity, and a 9% annual coupon and sells for $1,095. What is its yield to maturity (YTM)?

  What is westons cost of equity capital

Weston Industries has a debt-equity ratio of 1.5. Its WACC is 9.2 percent, and its cost of debt is 6%. The Corporate tax rate is 35%. What is Weston’s cost of equity capital? What is Weston’s unlevered cost of equity capital?

  Security markets are efficient when each

Security markets are efficient when each of the following exist except:

  Briefly describe arbitrage pricing model

“Is it not inconsistent to measure risk by standard deviation in mean-variance (portfolio theory) and by beta in the Capital Asset Pricing Model”? Discus. The problems and shortcomings of Capital Asset Pricing Model. Briefly describe Arbitrage Pricin..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd