Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your company is thinking about the purchase of a partial interest in a new training facility. The acquisition would eliminate about 200,000 of annual expenses

Your company is thinking about the purchase of a partial interest in a new training facility. The acquisition would eliminate about 200,000 of annual expenses over each of the next 10 years. The total purchase price of your partial interest is 5,000,000 plus annual operating cost of 50,000. Assume straight line depreciation for 20 years. The company tax rate is 40% and their cost of capital is 8%. What is the net present value of this purchase? please show formula and math in your answer

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

Entrepreneurial Finance Venture Capital Deal Structure And Valuation

Authors: Janet Kiholm Smith, Richard L. Smith

2nd Edition

1503603210, 978-1503603219

More Books

Students also viewed these Finance questions

Question

OUTCOME 5 Discuss sexual harassment as an employment equity issue.

Answered: 1 week ago