Question
You have been given the following information on a project: It has a 3-year lifetime The initial investment in the project will be $27 million,
You have been given the following information on a project:
It has a 3-year lifetime
The initial investment in the project will be $27 million, and the investment will be depreciated straight line, down to a salvage value of $7 million at the end of the fourth year.
The revenues are expected to be $21 million next year and to grow 1% a year after that for the remaining two (0) years.
The cost of goods sold, excluding depreciation, is expected to be 65% of revenues.
The tax rate is 0.39.
Estimate the after-tax return on capital, by year, to find the average for the project. (Answer format is a zero, a decimal point, then 4 digits, for example 0.1234)
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