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RoadRollers Paving Company is considering buying a new asphalt laying machine. The machine costs $1,300,000 and the CCA calculation is based on 20% over its
RoadRollers Paving Company is considering buying a new asphalt laying machine. The machine costs $1,300,000 and the CCA calculation is based on 20% over its life of 5 years. The machine is expected to have no salvage value. The revenues are expected to be $600,000 per year, and the costs are estimated at $220,000 per year. This investment is financed by 50% equity and 50% debts. The risk free rate is 5% and the risk premium is 4.0%. Assume the risk of this project is the same as the firm
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