Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Daily Enterprises is purchasing a $ 1 0 , 0 0 0 , 0 0 0 machine. The machine will be depreciated using straightline depreciation

Daily Enterprises is purchasing a $10,000,000 machine. The machine will be depreciated using straightline depreciation over its 6 year life and will have no salvage value. The machine will generate revenues of $10,000,000 per year along with fixed costs of $2,000,000 per year.
If Daily's marginal tax rate is 26%, what will be the cash flow in each of years 1 to 6(the cash flow will be the same each year)?
Enter your answer rounded to the nearest whole number.
Enter your answer below.
6,353,333
Correct response: 6,353,333+-1
If the discount rate is 9%, what is the NPV of the project? The cash flow each year is $6,353,333. Enter your answer rounded to the nearest whole number.
Enter your answer below.
Should Daily accept or reject the project (choose one)?
Enter your answer below.
Accept
Reject
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Housing Finance

Authors: Peter King

2nd Edition

0415432952, 978-0415432955

More Books

Students also viewed these Finance questions