Question
Fyre Technology Corp. (FTC) has a WACC of 18% and a corporate tax rate of 35%. FTC is considering installing a new air filter system.
Fyre Technology Corp. (FTC) has a WACC of 18% and a corporate tax rate of 35%. FTC is considering installing a new air filter system. The project team comes up with the following numbers:
- Initial investment (at t = 0): $400,000
- Economic life: 5
-After-taxoperatingexpenses/year (at t = 1 to 5): $60,000
- Salvage value at the end of the economic life (at t = 5): $0
What is the NPV of this project (excludingthe present value of CCA tax shields)?
Step by Step Solution
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Step: 1
Answer To calculate the Net Present Value NPV of the project we can use the following formula NP...
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Financial Theory and Corporate Policy
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
4th edition
321127218, 978-0321179548, 321179544, 978-0321127211
