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Please can someone help me woth the npv vaue Q5) Your corporation is considering investing in a new product line. The annual revenues (sales) for
Please can someone help me woth the npv vaue
Q5) Your corporation is considering investing in a new product line. The annual revenues (sales) for the new product line are expected to be $160,537.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $47,787.00. The old equipment currently has no market value. The new equipment cost $72,456.00. The new equipment will be depreciated to zero using straight-line depreciation for the three-year life of the project. At the end of the project the equipment is expected to have a salvage value of $18,282.00. An increase in net working capital of $57,242.00 is also required for the life of the project. The corporation has a beta of 1.819, a tax rate of 35.84%, and a target capital structure consisting of 63.80% equity and 36.20% debt. Treasury securities have a yield of 2.84% and the expected return on the market is 8.97%. In addition, the company currently has outstanding bonds that have a yield to maturity of 6.50% Step by Step Solution
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