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Problem:

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.

Required:

Question: What is the net present value for this project?

$1,390,658
$1,295,706
$6,500,098
$1,434,217
$1,117,670

Note: Be sure to show how you arrived at your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162392

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