Question
Foley Systems is considering a new investment with the data shown in the following. The equipment would be depreciated on a straight-line basis over the
Foley Systems is considering a new investment with the data shown in the following. The equipment would be depreciated on a straight-line basis over the projects three-year life, would have a zero-salvage value, and would require no additional net operating working capital. Revenues and operating costs are expected to be constant for the projects life. The tax rate is 35%. What is the projects NPV, IRR, Discounted Payback, and Profitability Index?
Cost of Capital | 12.00% |
Net Investment | 900,000 |
Revenue | 650,000 |
Op Costs (excluding depreciation) | 200,000 |
Depreciation Rate of Cost Value | 33.33% |
Tax Rate | 25.00% |
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