Question
PLEASE SHOW WORK Foley Systems is considering a new investment whose data are shown below. The equipment would be depreciated using the MCRS system basis
PLEASE SHOW WORK
Foley Systems is considering a new investment whose data are shown below. The equipment would be depreciated using the MCRS system basis over the projects 4-year life, would have a $2,000 salvage value, and would require some additional working capital that would be recovered at the end of the projects life. Revenues and other operating costs are expected to be constant over the projects life. What is the projects NPV? The accelerated rates for such property are 33%, 45%, 15%, and 7% for Years 1 through 4.
WACC 10.0%
Net initial investment in fixed assets $75,000
Required new working capital $15,000
Sales revenues, each year $75,000
Operating costs (excluding depreciation), each year $25,000
Tax rate 40.0%
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