Question
How do you determine NPV if the discount rate is not provided in the problem? Example: QuasiTek is planning to launch a new version of
How do you determine NPV if the discount rate is not provided in the problem? Example: QuasiTek is planning to launch a new version of its motoped devices over the next 3 years. The new devices should produce revenues of $6000 in each year. Fixed costs to produce the devices will run $600 each year. The capital investment in new equipment will be $15,000 and qualifies as MACRS 3-year property. QuasiTek should be able to salvage the equipment at the end of the third year for $4600. The project will require an initial investment in NWC of $5000 with the level equal to 80% of revenue thereafter. Quasitek has a 34% marginal tax rate and a required return of 24% on similar projects. After the rest of the work is done here is the Total Cash Flow's within the worksheet: -19,000 4,464 5,830 11,808
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