You are asked to evaluate a project proposal for Edmonton Plaza. The equipment that would be used would have a constant annual capital cost allowance over the project's 3-year life and a zero salvage value. This project would require some additional working capital that would be recovered at the end of the project's life. Revenues and cash operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? This question is worth 15% of your grade. WACC 10.0% Net investment in fixed assets (basis) 65,000 Required new working capital 10,000 Annual capital cost allowance 21,665 Sales revenues, each year 70,000 Cash operating costs, each year 25,000 Tax rate 35.0% O a. 26,584 O b. 28,913 O c. 24,111 O d. 22,318
You are asked to evaluate a project proposal for Edmonton Plaza. The equipment that would be used would have a constant annual capital cost allowance over the project's 3-year life and a zero salvage value. This project would require some additional working capital that would be recovered at the end of the project's life. Revenues and cash operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? This question is worth 15% of your grade. WACC 10.0% Net investment in fixed assets (basis) 65,000 Required new working capital 10,000 Annual capital cost allowance 21,665 Sales revenues, each year 70,000 Cash operating costs, each year 25,000 Tax rate 35.0% O a. 26,584 O b. 28,913 O c. 24,111 O d. 22,318
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter14: Real Options
Section: Chapter Questions
Problem 4MC
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