Goldsmith labs recover gold from printed circuit boards. It has developed a new equipment for the purpose. The following data is given. 1) Equipment costs $250,000 2) It will cost 100,000 per year to run 3) It has an economic life of 5 years and is depreciated using straight-line method 4) It will recover 1000 ounces of gold per year 5) The current price of gold is $300 per ounce and it expected to increase at a rate 4% per year for the foreseeable future 6) The tax rate is 30% 7) The cost of capital is 8% What is NPV of the equipment? (M) A. $580,400 C. $470,400 B. $520,510 D. None of the above
Goldsmith labs recover gold from printed circuit boards. It has developed a new equipment for the purpose. The following data is given. 1) Equipment costs $250,000 2) It will cost 100,000 per year to run 3) It has an economic life of 5 years and is depreciated using straight-line method 4) It will recover 1000 ounces of gold per year 5) The current price of gold is $300 per ounce and it expected to increase at a rate 4% per year for the foreseeable future 6) The tax rate is 30% 7) The cost of capital is 8% What is NPV of the equipment? (M) A. $580,400 C. $470,400 B. $520,510 D. None of the above
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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Goldsmith labs recover gold from printed circuit boards. It has developed a new equipment for the purpose. The following data is given.
1) Equipment costs $250,000
2) It will cost 100,000 per year to run
3) It has an economic life of 5 years and is
4) It will recover 1000 ounces of gold per year
5) The current price of gold is $300 per ounce and it expected to increase at a rate 4% per year for
the foreseeable future
6) The tax rate is 30%
7) The cost of capital is 8%
What is NPV of the equipment? (M)
A. $580,400 C. $470,400
B. $520,510 D. None of the above
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