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Revenues Cost of Goods Sold - Depreciation = EBIT Year O Year 1 Year 2 Year 3 363,688.342363,688.342 363,688.342 -150,000 -150,000 -150,000 -80,000 -80,000
Revenues Cost of Goods Sold - Depreciation = EBIT Year O Year 1 Year 2 Year 3 363,688.342363,688.342 363,688.342 -150,000 -150,000 -150,000 -80,000 -80,000 -80,000 133,688.342133,688.342 133,688.342 -46,790.91966,790.9196-46,790.9196 - Taxes (35%) = Unlevered net income + Depreciation - Additions to Net Working Capital 86,897.422186,897.4221 86,897.4221 80,000 80,000 80,000 -20,000 -20,000 -20,000 -Capital Expenditures -300,000 = Free Cash Flow 146,897.422146,897.422 146,897.422 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. By how much could the discount rate rise before the net present value (NPV) of this project is zero, given that it is currently 10%?
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Answer To determine the discount rate at which the net present value NPV of the project becomes zero ...Get Instant Access to Expert-Tailored Solutions
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