Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $11,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $4,000,000 per year for each of the next 9 years. In year 9 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $1 million. Thus, in year 9 the investment cash inflow totals $5,000,000. Calculate the project's NPV using a discount rate of10 percent.
NPV=-Initial investment+Annual cash flow/rate*(1-1/(1+rate)^t)+After tax salvage value/(1+rate)^t=-11000000+4000000/10%*(1-1/1.1^9)+1000000/1.1^9=12460192.88
Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion...
(Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $10 500 000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $3 500 000 per year for each of the next 7 years. In year 7 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued...
FEZ (SITai to (Net present value calculation) Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the exxpenditure of $9,000,000 on new service equipment and would generale annual net cash inflows from reduced costs of operations equal to $3,500,000 per year for each of the next 6 years. In year 6 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at...
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Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $9,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $3,500,000 per year for each of the next 7 years. In year 7 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $0.9 million. Thus, in year 7 the investment cash...
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