Question
A firm is looking at an expansion project will entail an equipment purchase of $110,000 along with another $10,000 in installation costs. MACRS 3 year.
A firm is looking at an expansion project will entail an equipment purchase of $110,000 along with another $10,000 in installation costs. MACRS 3 year. Increased net sales (net of expenses except for depreciation which is EBITDA) are 40,000 year 1, 70,000 year 2 and 40,000 year 3.
The equipment can be sold at the end of the 3 years for $20,000. Tax 30%. WACC 8%
- What is the initial investment (CF0)?
- What are the year 1-3 OCFs (operating cash flows)?
- What is the terminal value?
- What is the NPV (net present value)?
- What is the IRR (internal rate of return)?
- What is the payback?
- What is the discounted payback?
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Finance And Security Global Vulnerabilities Threats And Responses
Authors: Martin S. Navias
1st Edition
1787381366, 978-1787381360
