Question
28 Assume that a company has provided the following information regarding a capital investment opportunity: Initial investment in equipment $ 160,000 Initial investment in working
28
Assume that a company has provided the following information regarding a capital investment opportunity:
| Initial investment in equipment | $ | 160,000 |
| Initial investment in working capital | $ | 25,000 |
| Estimated annual sales | $ | 150,000 |
| Estimated annual cash operating expenses | $ | 77,000 |
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The equipment has a four-year useful life and no salvage value. The working capital will be released at the end of the project. The companys tax rate is 30%. Assuming a discount rate of 19%, the net present value of this investment is closest to:
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Financial and Managerial Accounting the basis for business decisions
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
16th edition
0077664078, 978-0077664077, 78111048, 978-0078111044
