Question
make an investment decision of this project by providing calculations: Investment Costs are $4.75 mil which cannot be depreciated. Revenue is expected to be $1
make an investment decision of this project by providing calculations:
Investment Costs are $4.75 mil which cannot be depreciated. Revenue is expected to be $1 mil in the first year of operations and is expected to grow at 5% over the second and third years and at 2.5% thereafter. The cost of sales is expected to be 50 % of sales revenue. Advertising costs are expected to be $100,000 in the first year and ongoing these costs are expected to be $50,000 in the second year, growing at the same rate as sales. The project's required return is 10% and the tax rate is 33%.
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