Question
Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 13 = $25,000 Year 0 initial investment = $45,000
Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 13 = $25,000
Year 0 initial investment = $45,000
Inventory level = $12,500 in year 1, $13,500 in year 2, and $7,500 in year 3
Production costs = $8,500 in each of years 13
Salvage value = $12,500 in year 4
Depreciation = 100% immediate bonus depreciation
Tax rate = 21%
Customers pay with a 6-month lag. If the cost of capital is 10%, what is the projects NPV? Assume that, if the project generates losses, those losses can be used to offset profits elsewhere in the business.
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