Long Inc. Is analyzing a $1 million Investment in new equipment to produce a product with a $5 per unit margin. The equipment will last 5 years, be depreciated on a straight-line basis for tax purposes, and have no value at the end of its life. A study of unit sales produced the following data. Annual Unit Sales 80,000 85,000 90,000 95,000 100,000 110,000 If Long utilizes a 12% hurdle rate and is subject to a 40% effective Income tax rate, the expected net present value of the project would be Multiple Choice O о Probability 0.10 0.20 0.30 0.20 0.10 0.10 O $261,750 $283,380 $297,800 $427,580 K 20 Next Please don't provide answer in image format thank you
Long Inc. Is analyzing a $1 million Investment in new equipment to produce a product with a $5 per unit margin. The equipment will last 5 years, be depreciated on a straight-line basis for tax purposes, and have no value at the end of its life. A study of unit sales produced the following data. Annual Unit Sales 80,000 85,000 90,000 95,000 100,000 110,000 If Long utilizes a 12% hurdle rate and is subject to a 40% effective Income tax rate, the expected net present value of the project would be Multiple Choice O о Probability 0.10 0.20 0.30 0.20 0.10 0.10 O $261,750 $283,380 $297,800 $427,580 K 20 Next Please don't provide answer in image format thank you
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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Question
Long Inc. Is analyzing a $1 million Investment in new equipment to produce a product with a $5 per unit margin. The equipment will last 5 years, be
Please don't provide answer in image format thank you
Transcribed Image Text:Long incenalyzing a $1mmon vestment in new equement to produce a orodact with a 30 per un magn. The autoren wirst
value at the end of its the A study of unit sales produced the futiowing data
Annual
unit Sales
00,000
65,000
90,000
95,000
100,000
110,000
Probability
0.10
0.20
0.30
9.20
0.10
0.10
If Long unizes a 12% hurdle rate and is subject to a 40% effective come tax rate, the expected set present vake of the project wo
Multiple Choice
$281.380
O $27.00
$427560
ned in 4 oreigntine basis for a speses, and have
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