Question
Abhay Communications is looking to invest in a new website which will require an investment of $2,500,000. The asset will be depreciated to zero over
Abhay Communications is looking to invest in a new website which will require an investment of $2,500,000. The asset will be depreciated to zero over it's 3 year life using the straight line method. After that it will be worthless (has no salvage value). The management team feels that the updated website will result in an additional $1,750,000 in sales each year with annual operating cost of $580,000. The tax rate is 25% and the discount rate is 13%. This is a three year project. Fill in the following information.
Cash Flow at time 0 =
Develop operating cash flow. Label the row and fill in the value
| Sales | |
| Earnings before Tax (EBT) | |
| Tax | |
| + depreciation | |
| Operating Cash Flow (OCF) | |
Show values entered in calculator
| CF0 | |
| C01 | |
| F01 | |
| i | 13 |
| NPV | |
| accept or reject project |
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Managing Finance A Socially Responsible Approach
Authors: D. Crowther
1st Edition
0750661011, 978-0750661010
