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Please answer with work Thanks you! 17. Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The
Please answer with work Thanks you!
17. Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero-salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV TO THE NEAREST VALUE? (Hint: Cash flows are constant in Years 1-3.) WACC Opportunity cost Net equipment cost (depreciable basis) Straight-line deprec, rate for equipment Sales revenues, each year Operating costs (excl. desoce.), each year 10.0% $100,000 $65,000 Tax rate a. $10,521 b. $11,075 c. $11,658 d. $12,270 e. $12,885 Step by Step Solution
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