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9. Excel Corporation is analyzing a proposed 3-years project. They expect to sell 50 units daily at an average selling price of S6.25 per unit.
9. Excel Corporation is analyzing a proposed 3-years project. They expect to sell 50 units daily at an average selling price of S6.25 per unit. The initial cash outlay for fixed assets will be S160.000. These assets will be depreciated by 20% every year using declining method to a certain book value over the life of the project. Fixed costs are expected to be $1000 per month and variable costs should be S1.50 per unit. The project requires an initial investment in net warking capital of $12,000 which will be recovered in full at the end of the projent's life. How shauld they take decision on the new venture if they require a 12% return on their investment and tax rate is 35 percent
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