FIN 571 Course Great Wisdom / tutorialrank.com FIN 571 Course Great Wisdom / tutorialrank.com | Page 13

Should the company make the purchase?

No

Yes

44.Down Under Boomerang, Inc., is considering a new three-year
expansion project that requires an initial fixed asset investment of
$2.64 million. The fixed asset will be depreciated straight-line to zero
over its three-year tax life, after which it will be worthless. The
project is estimated to generate $2,060,000 in annual sales, with costs
of $755,000. The tax rate is 35 percent and the required return is 13
percent.

What is the project’s NPV? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g., 32.16.)

NPV $

45.What is the net present value of a project with an initial cost of
$36,900 and cash inflows of $13,400, $21,600, and $10,000 for Years
1 to 3, respectively? The discount rate is 13 percent.
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