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A project for a new telephone distribution plant did not yield estimated sales and is being terminated with no ($0) market value, because the telephone
A project for a new telephone distribution plant did not yield estimated sales and is being terminated with no ($0) market value, because the telephone equipment will be converted to produce another product. The project had the following cash flows in actual dollars. The company uses a real interest rate i' = 10% for this product, and inflation is expected to maintain at a 5% average. The telephone distribution company uses MACRS depreciation and has a combined tax rate is 45%. Estimate the after tax cash actual dollar cash flows, convert the actual dollar cash flows to real dollars, and compute the net present worth in real dollars. Cash flows are in actual dollars
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