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The table below offers EBIT for a potential capital investment for Fake Company Zeta. (This same project will be used for all of your FMC
The table below offers EBIT for a potential capital investment for Fake Company Zeta. (This same project will be used for all of your FMC #3 work.) You should be able to determine a few things once you consider the following:
- The initial investment is $4,000,000.
- Depreciation is straight line over four years.
- The company's WACC is estimated at 12.5%.
- Company analysts estimate that a proper salvage value at the end of the project life of four years is about 30% of the initial investment.
- The company's tax rate is 30.0%.
YEAR 1 YEAR 2 YEAR 3 YEAR 4
EBIT $(232,625) $175,000 $1,024,000 $1,731,250
What is this project'sNOPAT in Year 4?
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