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Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows: Year 1 $800,000 Year 2 $900,000 Year 3 $400,000 (due to planned repairs) Year 4 $900,000 Year 5 $950,000 (including the disposal value). The company uses a discount rate of 15% What is the Net Present Value of the proposed investment? SHOW YOUR WORK.

Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows: Year 1 $800,000 Year 2 $900,000 Year 3 $400,000 (due to planned repairs) Year 4 $900,000 Year 5 $950,000 (including the disposal value). The company uses a discount rate of 15% What is the Net Present Value of the proposed investment? SHOW YOUR WORK.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows: Year 1 $800,000 $900,000 $400,000 (due to planned repairs) $900,000 $950,000 (including the disposal value). Year 2 Year 3 Year 4 Year 5 The company uses a discount rate of 15%. What is the Net Present Value of the proposed investment? SHOW YOUR WORK.
Transcribed Image Text:Marquette Innovations Corp. is considering investing in new excavation equipment for their mining business. The investment will require an outlay of $2,000,000 initially, and is expected to generate the following after-tax cash flows: Year 1 $800,000 $900,000 $400,000 (due to planned repairs) $900,000 $950,000 (including the disposal value). Year 2 Year 3 Year 4 Year 5 The company uses a discount rate of 15%. What is the Net Present Value of the proposed investment? SHOW YOUR WORK.
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