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The plant will cost $100,000 to build. It will be depreciated as a 7 -year MACRS asset. The estimated salvage at the end of 10
The plant will cost $100,000 to build. It will be depreciated as a 7 -year MACRS asset. The estimated salvage at the end of 10 years is zero. The firm's marginal tax rate 40 percent. Use Table II, Table IV, and Table 9A3 to answer the questions below. a. Calculate the net investment required to build the plant. Round your answers to the nearest dollar. $ b. Calculate the annual net cash flows from the project. Round your answers to the nearest dollar. c. Calculate the net present value if Sisneros uses a 15 percent cost of capital to evaluate projects of this type. Round your answer to the nearest dollar. $ Should the plant be built? the plant because NPV 0 d. Calculate the payback period for this project. Round your answer up to the nearest whole number. years e. How many internal rates of return does this project have? Why? The project has because its cash flows have
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