Question
The second phase will start at T=4. The company expects the following income for the second phase: Item/Year T=4 T=5 T=6 T=7 T=8 T=9 Capital
The second phase will start at T=4. The company expects the following income for the second phase:
| Item/Year | T=4 | T=5 | T=6 | T=7 | T=8 | T=9 |
| Capital Investment | 2500 |
|
|
|
|
|
| Working capital | 500 |
|
|
|
|
|
| EBT |
| 350 | 350 | 500 | 600 | 750 |
After year 9, the EBT continues at $750 for the next 6 years (until year 15), at the end of which of the factory will be sold for $2000. The companys depreciation and capital investments each year are the same.
What is the NPV of Phase II?
Tax rate is 30% and discount rate is 20%.
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The Legal Environment Today Summarized Case Edition
Authors: Roger LeRoy Miller
8th Edition
130526276X, 978-1305279407, 1305279409, 978-1305704930, 1305704932, 978-1305262768
