The Jacob Chemical Company is considering building a new potassium sulfate plant. The following cash outlays are required to complete the plant: Year Cash Outlay 0 $6,000,000 1 1,700,000 2 400,000 Jacob’s cost of capital is 12 percent, and its marginal tax rate is 40 percent. Calculate the plant’s net investment (NINV). Use Table II to answer the questions. Round your answer to the nearest dollar. $ What is the installed cost of the plant for tax purposes? Round your answer to the nearest dollar. $
The Jacob Chemical Company is considering building a new potassium sulfate plant. The following cash outlays are required to complete the plant: Year Cash Outlay 0 $6,000,000 1 1,700,000 2 400,000 Jacob’s cost of capital is 12 percent, and its marginal tax rate is 40 percent. Calculate the plant’s net investment (NINV). Use Table II to answer the questions. Round your answer to the nearest dollar. $ What is the installed cost of the plant for tax purposes? Round your answer to the nearest dollar. $
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6P
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Question
The Jacob Chemical Company is considering building a new potassium sulfate plant. The following cash outlays are required to complete the plant:
Year | Cash Outlay | ||
0 | $6,000,000 | ||
1 | 1,700,000 | ||
2 | 400,000 |
Jacob’s cost of capital is 12 percent, and its marginal tax rate is 40 percent.
- Calculate the plant’s net investment (NINV). Use Table II to answer the questions. Round your answer to the nearest dollar.
$
- What is the installed cost of the plant for tax purposes? Round your answer to the nearest dollar.
$
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