Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help and show how to calculated A 10-yr project has an initial cost of $300,000 for fixed assets.The fixed assets will be depreciated to

Please help and show how to calculated

A 10-yr project has an initial cost of $300,000 for fixed assets.The fixed assets will be depreciated to a $0 book value using a 20-yr straight line depreciation method.

Each year, annual revenue is $30,000 and cost is $10,000.

After 10 years, you will terminate the project. You expect to sell the the fixed assets for $200,000.

The project is financed by 30% equity and 70% debt. The required rate of return on equity is 7% and the borrowing cost is 3%.

Assume the tax rate is 25%.

What is the project's NPV?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Mathematics For Business

Authors: Stanley A Salzman, Charles D Miller, Gary Clendenen

8th Edition

0321357434, 9780321357434

More Books

Students also viewed these Finance questions

Question

Goodwill is a favorable name or reputation by the entity.

Answered: 1 week ago

Question

Values: What is important to me?

Answered: 1 week ago

Question

Purpose: What do we seek to achieve with our behaviour?

Answered: 1 week ago

Question

An action plan is prepared.

Answered: 1 week ago