Question
can someone show me the step - by - step process for the following questions? the answers are listed but i just need to know
can someone show me the step - by - step process for the following questions? the answers are listed but i just need to know how to get there with formulas
A four-year project requires an initial investment of $165,000 in fixed assets plus$25,000 in net working capital. The project has after-tax costs of $14,500. The assets belong in a20% CCA class and will have no salvage value. What is the project's equivalent annual cost if the required return is 14% and the firm's tax rate is 34%?
Answer: $63,998
Consider a $12,000 machine that will reduce after-tax operating costs by $2,500 per year overa five-year period. Assume no changes in net working capital and a salvage value of zero.Further assume that the machine belongs in a 20% CCA class, a marginal tax rate of 34%, and arequired return of 10%. The project NPV is:
Answer: $73
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