Simmons, Inc., is considering a new 4-year project that requires an initial fixed asset investment of...

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Simmons, Inc., is considering a new 4-year project that requiresan initial fixed asset investment of $2.65 million. The fixed assetis eligible for 100 percent bonus depreciation in the first year.At the end of the project, the asset can be sold for $395,000. Theproject is expected to generate $2.45 million in annual sales, withannual expenses of $950,000. The project will require an initialinvestment of $420,000 in NWC that will be returned at the end ofthe project. The corporate tax rate is 22 and the project has arequired return of 13 percent. What is the NPV of the project?

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The NPV 137261802Cash flows are as belowTax shield 100CostTax See Answer

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Simmons, Inc., is considering a new 4-year project that requiresan initial fixed asset investment of $2.65 million. The fixed assetis eligible for 100 percent bonus depreciation in the first year.At the end of the project, the asset can be sold for $395,000. Theproject is expected to generate $2.45 million in annual sales, withannual expenses of $950,000. The project will require an initialinvestment of $420,000 in NWC that will be returned at the end ofthe project. The corporate tax rate is 22 and the project has arequired return of 13 percent. What is the NPV of the project?