Asset acquisition is $1,400,000 with a four-year life (straight-line depreciation) and no salvage value. You estimate sales at 180 units/year with a $16,000/unit selling price. Variable costs are expected to be $9,800/unit, and fixed costs will be $430,000 annually. Your project requires a 12% rate of return, and the company’s tax rate is 35%. Based on prior experience, you believe unit sales, variable costs, and fixed cost projections to be accurate to within +/- 10%. a.
Asset acquisition is $1,400,000 with a four-year life (straight-line depreciation) and no salvage value. You estimate sales at 180 units/year with a $16,000/unit selling price. Variable costs are expected to be $9,800/unit, and fixed costs will be $430,000 annually. Your project requires a 12% rate of return, and the company’s tax rate is 35%. Based on prior experience, you believe unit sales, variable costs, and fixed cost projections to be accurate to within +/- 10%. a.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Asset acquisition is $1,400,000 with a four-year life (straight-line
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