Thurston Petroleum is considering a new project that complements its existing business. The machine required...
60.1K
Verified Solution
Link Copied!
Question
Finance
Thurston Petroleum is considering a new project that complements its existing business. The machine required for the project costs $4.25 million. The marketing department predicts that sales related to the project will be $2.47 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated to zero over its 4-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 25 percent of sales. The company also needs to add net working capital of $165,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The tax rate is 23 percent and the required return for the project is 12 percent. What is the value of the NPV for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) INPV $ 2,612,283.38
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: Flex AI - Your personal assistant for all your inquiries!
