Question
Glenora Inc. is considering the following project: The equipment has a 4-year project life. This equipment falls into class 43 with a CCA rate of
Glenora Inc. is considering the following project: The equipment has a 4-year project life. This equipment falls into class 43 with a CCA rate of 30% and would have zero salvage value. The firm has other assets in asset class 43. No new working capital would be required. Revenues and cash operating costs are expected to be constant over the projects 4-year life. What is the projects NPV?
| WACC | 8.0% | |||
| Net investment cost | $65,000 | |||
| Sales revenues, each year | $70,000 | |||
| Cash operating costs | $25,000 | |||
| Tax rate | 35.0% | |||
| A | $29,250 | |
| B | $96,880 | |
| C | $16,284 | |
| D | $49,175 |
Please show work!
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Managerial Accounting Decision Making and Motivating Performance
Authors: Srikant M. Datar, Madhav V. Rajan
1st edition
132816245, 9780132816243, 978-0137024872
