Mrs. Sally Selfish's company is considering a project that has a 10 year life and cost GHC 5000. It would save GHC 1.000 per vear in operating cost and increase revenue hy GHC 600. per year. It would be financed with a 10 year loan with an interest of 8% per year. The salvage value for the newly purchased equipment is zero. If the minimum annual rate of return (MARR) or hurdle rate is 14% and the tax rate is 25%, what is the net present value (NPV) of the project. Use the straight line method to calculate the depreciation.

Mrs. Sally Selfish's company is considering a project that has a 10 year life and cost GHC 5000. It would save GHC 1.000 per vear in operating cost and increase revenue hy GHC 600. per year. It would be financed with a 10 year loan with an interest of 8% per year. The salvage value for the newly purchased equipment is zero. If the minimum annual rate of return (MARR) or hurdle rate is 14% and the tax rate is 25%, what is the net present value (NPV) of the project. Use the straight line method to calculate the depreciation.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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