Problemsummer thyme is considering a new 5-year expansion, Ask an Expert

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Summer Thyme., is considering a new 5-year expansion project that requires an initial fixed asset investment of $3.51 million. The fixed asset will be depreciated straight-line to zero over its 5-year tax life, after which it will be worthless. The project is estimated to generate $3,120,000 in annual sales, with costs of $1,248,000. The tax rate is 33 percent and the required return is 14 percent. The project requires an initial investment in net working capital of $390,000 and the fixed asset will have a market value of $273,000 at the end of the project.

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Question: What is the NPV?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170905

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