Phoney Communications Ltd pays income as franked dividends usable by Australian resident shareholders. The company is considering the purchase of a new telecommunications tower to replace an existing one. The new tower would be used to improve mobile phone coverage but with technological advances happening so quickly, Phoney expects that in four years’ time the tower will be redundant. Expected sale value on the tower is $200,000. The new machine costs $1,000,000. As the tower will be placed in a native bushland area, removal of the tower must be followed by re-establishment of foliage, which will cost approximately $2,000. Compute the terminal cash flow for this capital budgeting analysis. $202,000 $198,000 $802,000 $798,000
Phoney Communications Ltd pays income as franked dividends usable by Australian resident shareholders. The company is considering the purchase of a new telecommunications tower to replace an existing one. The new tower would be used to improve mobile phone coverage but with technological advances happening so quickly, Phoney expects that in four years’ time the tower will be redundant. Expected sale value on the tower is $200,000. The new machine costs $1,000,000. As the tower will be placed in a native bushland area, removal of the tower must be followed by re-establishment of foliage, which will cost approximately $2,000. Compute the terminal cash flow for this capital budgeting analysis. $202,000 $198,000 $802,000 $798,000
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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- Phoney Communications Ltd pays income as franked dividends usable by Australian resident shareholders. The company is considering the purchase of a new telecommunications tower to replace an existing one. The new tower would be used to improve mobile phone coverage but with technological advances happening so quickly, Phoney expects that in four years’ time the tower will be redundant. Expected sale value on the tower is $200,000. The new machine costs $1,000,000. As the tower will be placed in a native bushland area, removal of the tower must be followed by re-establishment of foliage, which will cost approximately $2,000. Compute the terminal cash flow for this capital budgeting analysis.
- $202,000
- $198,000
- $802,000
- $798,000
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