Question
An IT company invested in equipment that costs $8 million. This equipment generates revenue of $2.1 million annually while incuring a yearly maintenance cost of
An IT company invested in equipment that costs $8 million. This equipment generates revenue of $2.1 million annually while incuring a yearly maintenance cost of $650 000. The WACC during the project is 8% and life time of the equipment is 10 years. The equipment has a salvage value of $200000 but is sold at a market value of $700000. Assume a tax rate of 40%, with no interest payment deductions.
Caution: Depreciation is not a cashflow item and is only used to calculate EBIT.
Calculate the NPV and IRR of the project.
(Show all the Excel formulas you used)
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SOLUTION To calculate the NPV and IRR of the project we need to determine the cash flows associated ...
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
