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 $1.1 million. Thus, in year 9 the investment cash inflow totals $5,100,000. Calculate the project's NPV using a discount rate of 7 percent. Question content area bottom Part 1 If the discount rate is 7 percent, then the project's NPV is $enter your response here.
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 $1.1 million. Thus, in year 9 the investment cash inflow totals $5,100,000. Calculate the project's NPV using a discount rate of 7 percent. Question content area bottom Part 1 If the discount rate is 7 percent, then the project's NPV is $enter your response here.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section10.A: Mutually Exclusive Investments Having Unequal Lives
Problem 2P
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Question
Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of
cash inflow totals
NPV using a discount rate 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
$1.1
million. Thus, in year
9
the investment $5,100,000.
Calculate the project's 7
percent.
Question content area bottom
Part 1
If the discount rate is
7
percent, then the project's NPV is
$enter your response here.
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