The market place is considering a new four-year expansion


The Market Place is considering a new four-year expansion project that requires an initial fixed asset investment of $2.8 million. The fixed asset will be depreciated straight-line to zero over its four-year tax life, after which time it will have a market value of $625,000. The project requires an initial investment in net working capital of $270,000, all of which will be recovered at the end of the project. The project is estimated to generate $2,550,000 in annual sales, with costs of $1,638,000. The tax rate is 34 percent and the required return for the project is 14 percent. What is the net present value?

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Financial Management: The market place is considering a new four-year expansion
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