Summer tyme inc is considering a new 3-year expansion, Ask an Expert

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Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $586000. The fixed asset will be depreciated straight-line to 47000 over its 3-year tax life, after which time it will have a market value of $131000. The project requires an initial investment in net working capital of $77000. The project is estimated to generate $242000 in annual sales, with costs of $112000. The tax rate is 0.32 and the required return on the project is 0.10. What is the aftertax salvage value (SVNOT) in year 3?

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Financial Management, Finance

Category:- Financial Management
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