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Dell Technologies Inc. is investing in a project and is purchasing a $10.10 million machine. It will cost $1.10 million to transport and install the
Dell Technologies Inc. is investing in a project and is purchasing a $10.10 million machine. It will cost $1.10 million to transport and install the machine. The machine has a depreciable life of 4 years, it will be fully depreciated using straight-line depreciation, and will have no salvage value. For each of the next 4 years, the machine will generate incremental revenues of $6.50 million per year along with incremental costs of $4.10 million per year. The company's tax rate is 25%. If Dell Technologies Inc's weighted average cost of capital (WACC) is 5%, what is the project's net present value (NPV)? Hint: The project has cash flows every year starting in year O up until (and including) year 4. O $-0.09 million O $-2.34 million O $2.50 million $-10.10 million
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