Question
California Hideaways is considering a new project whose data are shown below. The equipment has a 4-year project life. This equipment falls into class 43
California Hideaways is considering a new project whose data are shown below. The equipment has a 4-year project life. This equipment falls into class 43 with a CCA rate of 30% and would have zero salvage value. No new working capital would be required. Revenues and cash operating costs are expected to be constant over the projects 4-year life. What is the projects NPV? (Hint: Cash flows are constant in Years 1 to 4.)
WACC 10.0% Net investment cost $65,000 Sales Revenue, each year $60,000 Cash Operating costs $25,000 Tax Rate 35.0%
A. $19,417 B. $16,284 C. $28,499 D. $23,402
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