Question
Figure 2: financial data - First year revenues: $11000 - Second year revenues: $15000 - Expenses (including depreciation): $100,000 per year - Initial time-zero (net)
Figure 2: financial data
- First year revenues: $11000
- Second year revenues: $15000
- Expenses (including depreciation): $100,000 per year
- Initial time-zero (net) fixed assets: $40000
- Depreciation: 10% of beginning of year net fixed assets
- Accounts payable (year 1 and 2): $500
- Corporate marginal tax: 30%
- Accurred expenses (year 1 and 2): $100
- Required cash: $2000
Using a 30% discount rate for the first two years and a $2000000 terminal value, what is the value of the venture at its launch:
(a) NPV=$1000735,4
(b) NPV=$1008652,8
(c) NPV=$1028804,8
(d) NPV=-$1028804,8
(e) NPV=$1068604,4
Correct answer: (c)
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