Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What will have to be the annual OCF for the project to have a NPV =0 in the following situation: A client is interested in

image text in transcribed
What will have to be the annual OCF for the project to have a NPV =0 in the following situation: A client is interested in buying 380 microwaves a year from you for 5 years. To be able to produce these microwaves, you need to invest in $780 in equipment. The equipment has a taxable life of 10 years and will be depreciated using straight line. At the end of the 5 years, the equipment can be sold for $80 (market or scrap year. You have estimated you will need $50 todaves is $10 per unit and you will incur in a fixed cost of $160a type of project is 12%. The corporate tax rate applicable to you in this . The appropriate discounting rate for this For your answer, do not enter the dollar sign (\$), DO able to you in this case is 20%. nearest dollar). Your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance

Authors: Harvey S. Rosen

5th Edition

025617329X, 978-0256173291

More Books

Students also viewed these Finance questions