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Ballabio Corporation is evaluating the purchase of a machinery system. The price of the system is $171,600. The system is fully depreciated at the time of purchase. The system would be sold after three years for $101,000. The system requires a $7,250 increase in net operating working capital. The new system would increase the revenues by $252,000 and the pretax cost by $200,000 per year. The company tax rate is 25 percent, and the WACC is 9.25 percent. What is the NPV of the project? What is MIRR of the

Ballabio Corporation is evaluating the purchase of a machinery system. The price of the system is $171,600. The system is fully depreciated at the time of purchase. The system would be sold after three years for $101,000. The system requires a $7,250 increase in net operating working capital. The new system would increase the revenues by $252,000 and the pretax cost by $200,000 per year. The company tax rate is 25 percent, and the WACC is 9.25 percent. What is the NPV of the project? What is MIRR of the

Essentials Of Investments
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
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Ballabio Corporation is evaluating the purchase of a machinery system. The price of the system is $171,600. The system is fully depreciated at the time of purchase. The system would be sold after three years for $101,000. The system requires a $7,250 increase in net operating working capital. The new system would increase the revenues by $252,000 and the pretax cost by $200,000 per year. The company tax rate is 25 percent, and the WACC is 9.25 percent. What is the NPV of the project? What is MIRR of the project?
Transcribed Image Text:Ballabio Corporation is evaluating the purchase of a machinery system. The price of the system is $171,600. The system is fully depreciated at the time of purchase. The system would be sold after three years for $101,000. The system requires a $7,250 increase in net operating working capital. The new system would increase the revenues by $252,000 and the pretax cost by $200,000 per year. The company tax rate is 25 percent, and the WACC is 9.25 percent. What is the NPV of the project? What is MIRR of the project?
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