Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

XYZ is considering a project that would last for 3 years and have a cost of capital of 22.30 percent. The relevant level of net

image text in transcribed

XYZ is considering a project that would last for 3 years and have a cost of capital of 22.30 percent. The relevant level of net working capital for the project is expected to be $1,545.00 immediately (at year 0); $4,500.00 in 1 year; $14,800.00 in 2 years; and $0.00 in 3 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. The tax rate is 45.50 percent. What is the net present value of this project?. Year 0 Year 1 Year 3 Year 2 $10,700.00 $10,700.00 $10,300.00 Revenue $ 0.00 $ 0.00 Costs $3,780.00 $3,690.00 $4,800.00 Depreciation $ 0.00 $1,840.00 $1,870.00 $1,600.00 Cash flows from capital spending $-6,710.00 $1,820.00 $ 570.00 $3,680.00 O $8855.75 (plus or minus $10) O $6171.13 (plus or minus $10) O $3342.08 (plus or minus $10) O $-287.30 (plus or minus $10) O None of the above is within $10 of the correct

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

Extinction Governance Finance And Accounting

Authors: Jill Atkins, Martina Macpherson

1st Edition

0367492989, 978-0367492984

More Books

Students also viewed these Finance questions

Question

explain what is meant by the terms unitarism and pluralism

Answered: 1 week ago