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Can Someone please help me to solve it? Gaston Company is considering a capital budgeting project that would require a $2,600,000 investment in equipment with
Can Someone please help me to solve it?
Gaston Company is considering a capital budgeting project that would require a $2,600,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after- tax cost of capital is 12%. It uses the straight-line depreciation method for financia!reporting and tax purposes. The project would provide net operating income each year for five years as follows: Sales Variable expenses $3,000,000 1,500,000 Contribution margin Fixed expenses Advertising, salaries, and other fixed 1,500,000 $630,000 out-of-pocket costs Depreciation Total fixed expenses Net operating income 520,000 1,150,000 350,000 Click here to yiew Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables Required Compute the project's net present value. (Round discount factor(s) to 3 decimal places) Net present valueStep by Step Solution
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