Cash Flow Estimation Salvage Value:XYZ Corporation is considering an expansion project. To date they have spent $51,400 investigating the viability of the project and have decided to proceed. The CEO of XYZ spent $22,100 last year on his business trip to New York where he discussed about the proposed new project with the board members. The company spent $55,000 on a marketing study before its current analysis regarding whether to accept or reject the project. The proposed project will cost $990,000.00. It will also cost additional $14,600.00 for shipping and installation. The project will be depreciated over a 3 year MACRS class life. XYX would use the 3-year MACRS method to depreciate the machine and equipment which are 33.33%, 44.45%, 14.81%, and 7.41%.If the project is undertaken the company will need to increase its inventories by $44,100, and its accounts payable will rise by $11,300. The company will realize an additional $874,450.00 in sales over each of the next three years. The company’s operating costs (not including depreciation) will increase by $404,702.00 a year. Both sales and the operating cost are expected to grow 4.45% annually during the life of the project. The company’s tax rate is 31.00%. At t = 3, the project’s economic life is complete, but it will have a salvage value (before-tax) of $97,500.00 after three years. The project’s WACC is 9.25%. What is the project’s net present value (NPV)?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more