You may attempt this question 2 more times for credit An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery costs $450 today and is expected to last for 10 years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $250 each year for 10 consecutive years and project outflows will also begin in one year and are expected to be $100.00 each year for 10 consecutive years. The corporate tax rate is 34% and the required rate of return is 6%. Calculate the project's net present value. $ Place your answer in dollars and cents. Do not include a dollar sign or comma in your answer. Work your analysis with at least four decimal places of accuracy. YOU ARE NOT FINISHED. NOW GO ON TO THE SECOND PART! PART 2. Given your estimate of the NPV, should you accept or reject the project? Type the word "accept" if you believe you should go ahead with the project or the word "reject" if you believe you should not go ahead with the project.
You may attempt this question 2 more times for credit An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery costs $450 today and is expected to last for 10 years with no salvage value. Straight line depreciation will be used. Project inflows connected with the new machinery will begin in one year and are expected to be $250 each year for 10 consecutive years and project outflows will also begin in one year and are expected to be $100.00 each year for 10 consecutive years. The corporate tax rate is 34% and the required rate of return is 6%. Calculate the project's net present value. $ Place your answer in dollars and cents. Do not include a dollar sign or comma in your answer. Work your analysis with at least four decimal places of accuracy. YOU ARE NOT FINISHED. NOW GO ON TO THE SECOND PART! PART 2. Given your estimate of the NPV, should you accept or reject the project? Type the word "accept" if you believe you should go ahead with the project or the word "reject" if you believe you should not go ahead with 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
Problem 1PS
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Transcribed Image Text:You may attempt this question 2 more times for credit
An airline is considering a project of replacement and upgrading of machinery that would improve
efficiency. The new machinery costs $450 today and is expected to last for 10 years with no salvage
value. Straight line depreciation will be used. Project inflows connected with the new machinery will
begin in one year and are expected to be $250 each year for 10 consecutive years and project
outflows will also begin in one year and are expected to be $100.00 each year for 10 consecutive
years. The corporate tax rate is 34% and the required rate of return is 6%. Calculate the project's
net present value.
$
Place your answer in dollars and cents. Do not include a dollar sign or comma in your answer. Work
your analysis with at least four decimal places of accuracy.
YOU ARE NOT FINISHED. NOW GO ON TO THE SECOND PART!
PART 2. Given your estimate of the NPV, should you accept or reject the project?
Type the word "accept" if you believe you should go ahead with the project or the word "reject" if you
believe you should not go ahead with the project.
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