Phone home inc is considering a new 5-year expansion, Ask an Expert

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Phone Home, Inc. is considering a new 5-year expansion project that requires an initial fixed asset investment of $2.48 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which time it will be worth $500,000. The project is estimated to generate $1 million in annual OCF. The initial NWC requirement is 300,000. The tax rate is 32 percent and the required return on the project is 11 percent. What is the net present value for this project?

Which of the following is correct?

1390658
1295706
6500098
1434217
1117670

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162367

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