Question
Aqua ltd has a proposal for a project whose cost is Sh.50million and has an economic useful life of 5 years. It has a nil
Aqua ltd has a proposal for a project whose cost is Sh.50million and has an economic useful life of 5 years. It has a nil residual value. The earnings before depreciation and tax expected from the project are as follows:
Year Earnings before depreciation and tax
Sh.000
1 12000
2 15000
3 18000
4 20000
5 22000
The corporate tax rate is 30% and depreciation is on straight line basis.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
11th Edition
1305262999, 1305262997, 035726164X, 978-1305262997
