Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer asap Your firm is considering a new project. The project will generate incremental revenues of $2,475,000 per year and incremental costs (other than
please answer asap
Your firm is considering a new project. The project will generate incremental revenues of $2,475,000 per year and incremental costs (other than depreciation) of $1,000,000 per year for five years. The project requires an initial upfront investment in net working capital (NWC) of $165,000 which will be recovered at the end of year five. The firm will have to purchase a new piece of equipment, at a cost of $3,390,000, that has a CCA rate of 30%. At the end of its five-year life, the equipment can be sold for $691,848. There are no capital gain taxes or terminal losses to worry about. The company has a cost of capital of 14% and pays a corporate tax rate of 36%. What would be the NPV of this project? Assume the half- year rule applies for CCA. O $543,628 $2,616,614 $902,952 $737,952 $823,648 Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started