Question
10 Tom is evaluating a project that costs $3,500,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero
10
Tom is evaluating a project that costs $3,500,000, has a four-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 100,000 units per year, price per unit is $55, variable cost per unit is $18, and fixed costs are $2 million per year. The tax rate is 21%, and the required rate of return on the project is 10%.
Calculate the equivalent annual cost of the machine. (Round to 2 decimals)
Please use excel in showing your steps & round to the correct decimal place, thank you!
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