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A project requires the purchase of machinery for $40,000. The machinery belongs in a 20% CCA class and will have a salvage value of $4,000
A project requires the purchase of machinery for $40,000. The machinery belongs in a 20% CCA class and will have a salvage value of $4,000 at the end of the 4 year project. It will require a net working capital investment of $2,000 up-front, and the net working capital is recovered at the end of the project. The firm has a tax rate of 35% and a required return of 10%. The project generates annual before-tax sales less cash costs equal to $15,000 in each of years 1 to 4. What is the project's NPV? 4 Multiple Choice $881 $1,169 $2,942
A project requires the purchase of machinery for \\( \\$ 40,000 \\). The machinery belongs in a \20 CCA class and will have a salvage value of \\( \\$ 4,000 \\) at the end of the 4 year project. It will require a net working capital investment of \\( \\$ 2,000 \\) up-front and the net working capital is recovered at the end of the project. The firm has a tax rate of \35 and a required return of \10. The project generates annual before-tax sales less cash costs equal to \\( \\$ 15,000 \\) in each of years 1 to 4 . What is the project's NPV? Multiple Choice. \\( \\$ 881 \\) \\( \\$ 1 \\times 69 \\) \\( \\$ 2,042 \\)Step by Step Solution
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