Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi there, Assuming the following 1) the manufacturing plant has a ten- year tax life, and BHB uses diminishing value method depreciation for the plant

Hi there, Assuming the following 1) the manufacturing plant has a ten- year tax life, and BHB uses diminishing value method depreciation for the plant at 20% per annum. At the end of the project i.e, at the end of year 6, the plant can be scrapped for 71 million. 2) the project will incur 310 million per annum in fixed costs. 3) BHB will manufacture 420,000 washing machines per year and expects to sell them at an average price of $2,500 per washing machine. 4) The variable production costs are $1400 per washing machine. 5) at the end of year 6, the company will sell the land. The WACC is 6.9%. The projects initial cash flows (0) is $525,775,000. Tax rate is 28% Compute the projects Net present value, and Internal rate of return. Please show workings

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Financial Planning And Control

Authors: Robert P. Greenwood

3rd Edition

0566083728, 978-0566083723

More Books

Students also viewed these Finance questions

Question

Discuss the importance of workforce planning.

Answered: 1 week ago

Question

Differentiate between a mission statement and a vision statement.

Answered: 1 week ago