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Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment is scrapped. The project will increase pre-tax revenues to the firm by $725,000 a year. The tax rate is 35 percent. If the firm requires a 14 percent rate of return what is the Net Present Value of this project?

The NPV is -$172,937.49.

The NPV is $387,516.67

The NPV is $251,860.34

The NPV is -$87,820.48.

The NPV is $447,202.05

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91609231

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