The TinX Corp. is investing in a machine which will increase the quality of their product. The initial investment in the machine is $800,000. The life of the machine is 4 years. The machine will be depreciated using the straight-line method. The annual sales will be $400,000, the annual fixed cost will be $50,000, and the annual variable cost will be 10% of the sales. If the required rate of return is 12% and corporate tax rate is 30%, what is the net present value of the project. Calculate the net present value of the project.
The TinX Corp. is investing in a machine which will increase the quality of their product. The initial investment in the machine is $800,000. The life of the machine is 4 years. The machine will be depreciated using the straight-line method. The annual sales will be $400,000, the annual fixed cost will be $50,000, and the annual variable cost will be 10% of the sales. If the required rate of return is 12% and corporate tax rate is 30%, what is the net present value of the project. Calculate the net present value of the project.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The TinX Corp. is investing in a machine which will increase the quality of their product.
The initial investment in the machine is $800,000. The life of the machine is 4 years.
The
machine will be
$400,000, the annual fixed cost will be $50,000, and the annual variable cost will be 10%
of the sales. If the required
of the project.
Calculate the net present value of the project.
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