Question
DouCity Taxi is considering expanding its fleet. The cost of the new taxis is $1,000,000. Taxis fall under CCA Class 16 and are allowed a
DouCity Taxi is considering expanding its fleet. The cost of the new taxis is $1,000,000. Taxis fall under CCA Class 16 and are allowed a CCA rate of 40%. DuoCity's tax rate is 45% and the relevant cost capital is 15%. The project will generate revenues in excess of expenditures of $450,000 per year for 5 years. The project will also require an immediate working capital increase of $50,000, no changes for the duration of the five years, and a return to normal working capital requirements at the end of 5 years. Assume the taxis will be sold at the end of the 5th year for $100,000.
what is the NPV of this project?
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