Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.754 million. The fixed asset will be depreciated straight-line to zero over its 3-year tax life, after which time it will be worthless. The project is estimated to generate $2,448,000 in annual sales, with costs of $979,200. If the tax rate is 31 percent and the required return on the project is 9 percent, what is the NPV for this project?© BrainMass Inc. brainmass.com October 10, 2019, 3:09 am ad1c9bdddf
Please refer attached file for better clarity of table.
Initial Fixed investment=$2,754,000
Useful life=3 years
Depreciation per year=(Initial investment-salvage value)/useful life=$918,000
Year End Initial investment Sales Costs ...
Solution depicts the steps to calculate the NPV of given investment proposal.