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Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the data above. If the cost of capital is
Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the data above. If the cost of capital is 8%, what is the net present value (NPV) of this project?
A. $326,083
B. $293,475
C. $309,779
D. $358,691
Year 0 Revenues Cost of Goods Sold Gross Profit Selling General and Admin Depreciation EBIT Income tax (20%) Incremental Earnings Year 1 800,000 -300,000 500,000 -110,000 -180,000 210,000 -42,000 168,000 Year 2 800,000 -300,000 500,000 -110,000 -180,000 210,000 -42,000 168,000 Year 3 800,000 -300,000 500,000 -110,000 -180,000 210,000 -42,000 168,000 -600,000 Capital Purchases Changes to NWC -12,000 -12,000 -12,000Step by Step Solution
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