Today ABC Corp. starts a project that requires it to invest in new equipment of $886,000. Doing so will earn ABC pre-tax cash flows of $116,000 anfually over 9 years. The equipment has a salvage value of $193,000. ABC's cost of capital is 7.60%, and its tax rate is 35%. The equipment falls into the 25% CCA class (half year rule applies). What is the NPV of the project?
Today ABC Corp. starts a project that requires it to invest in new equipment of $886,000. Doing so will earn ABC pre-tax cash flows of $116,000 anfually over 9 years. The equipment has a salvage value of $193,000. ABC's cost of capital is 7.60%, and its tax rate is 35%. The equipment falls into the 25% CCA class (half year rule applies). What is the NPV of the project?
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
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Today ABC Corp. starts a project that requires it to invest in new equipment of $886,000. Doing so will earn ABC pre-tax cash flows of $116,000 anfually over 9 years. The equipment has a salvage value of $193,000. ABC's cost of capital is 7.60%, and its tax rate is 35%. The equipment falls into the 25% CCA class (half year rule applies). What is the NPV of the project?
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