Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Nyambose Itd is evaluating a project. Projected profit for the first year of the project is as follows. The corporate tax rate is 28%

Nyambose Itd is evaluating a project. Projected profit for the first year of the project is as follows. The corporate tax rate is 28% Sales Cost of sales R 250 000 150 000 The machinery to be used in the project has a cost of R200 000 and an expected residual value of zero at the end of the four-year project life. The depreciation is included in the cost of sales, and the tax and accounting depreciation is identical. The company's WACC is 18% (a) What is the depreciation charge per year (2 marks) (b) What are the net cash flows for this project in year 0 (2 marks) (d) What is the NPV of this project marks) (c) What will be the net cash flows for this project in year 17 marks)

Step by Step Solution

3.46 Rating (159 Votes )

There are 3 Steps involved in it

Step: 1

a What is the depreciation charge per year The depreciation charge per year is calculated as follows Depreciation charge per year Cost of machinery Re... 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

Real Estate Finance and Investments

Authors: William Brueggeman, Jeffrey Fisher

14th edition

73377333, 73377339, 978-0073377339

More Books

Students also viewed these Finance questions

Question

Define paraphrasing and reflecting.

Answered: 1 week ago

Question

What is the cerebrum?

Answered: 1 week ago

Question

What is meant by usable vs. rentable space?

Answered: 1 week ago