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Exercise: A company is considering a new expansion project that required $3.9 million initial investment, the fixed asset will depreciate using the straight line method
Exercise: A company is considering a new expansion project that required $3.9 million initial investment, the fixed asset will depreciate using the straight line method to zero in 3 years. The project is estimated to generate $2,650,000 in sales revenue and an annual cost of $840,000, if the tax rate is 35% and the required rate of return is 12%. What is the NPV using the tax shield method? Answer: $18,587.71 Al Shoba
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