DSSS Corporation DSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $115,000. The cost of shipping and installation is an additional $17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per year. Cost of goods sold will be 60% of sales. The project will require an increase in net working capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's appropriate discount rate is 10%. The fixed expenses is $12,000. Refer to DSSS Corporation. What is the NPV of the project? $39,030 $34,906 $37,423 -$34,906
DSSS Corporation DSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $115,000. The cost of shipping and installation is an additional $17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per year. Cost of goods sold will be 60% of sales. The project will require an increase in net working capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's appropriate discount rate is 10%. The fixed expenses is $12,000. Refer to DSSS Corporation. What is the NPV of the project? $39,030 $34,906 $37,423 -$34,906
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:DSSS Corporation
DSSS Corporation is considering a new project to manufacture widgets. The cost of the
manufacturing equipment is $115,000. The cost of shipping and installation is an additional
$17,000. The asset will fall into the 3-year MACRS class. The year 1-4 MACRS percentages
are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $220,000 per
year. Cost of goods sold will be 60% of sales. The project will require an increase in net working
capital of $17,000. At the end of three years, DSSS plans on ending the project and selling the
manufacturing equipment for $30,000. The marginal tax rate is 40% and DSSS Corporation's
appropriate discount rate is 10%. The fixed expenses is $12,000.
Refer to DSSS Corporation. What is the NPV of the project?
$39,030
$34,906
$37,423
-$34,906
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