Grapple, Inc. is hooked on the idea of a new investment project. The project requires...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Grapple, Inc. is hooked on the idea of a new investment project. The project requires a machine that costs $160,000 plus $40,000 in setup costs that will be expensed immediately. Also, $32,000 in additional net working capital will be needed for the project. The project is expected to have an 8-year life, but the machine will be depreciated to a book value of $10,000 over 6 years. The machine is expected to be sold for $15,000 at the end of the 8 years. Revenues minus costs are expected to be $58,000 per year. The cost of capital is 14%. The relevant tax rate is 40%. Compute the NPV of the Grapple project.
Time Item Before-tax cash flow After-tax cash flow Present value
0 Initial outlay -160,000 -160,000 -160,000
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
