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Your firm is contemplating purchasing a new piece of equipment that would allow for additional production. Project details: Equipment cost $82,000, installation cost $8,000. MACRS 3 year. EBITDA has been calculated to be $30,000 year 1, $50,000 year 2, $30,000 year 3. The equipment can be sold at the end of the 3 years for $10,000. Tax rate 30% WACC 10% 1. What is the NPV and IRR for this project. 2. If WACC increases to 12% what will be the NPV and IRR for the project?

Your firm is contemplating purchasing a new piece of equipment that would allow for additional production. Project details: Equipment cost $82,000, installation cost $8,000. MACRS 3 year. EBITDA has been calculated to be $30,000 year 1, $50,000 year 2, $30,000 year 3. The equipment can be sold at the end of the 3 years for $10,000. Tax rate 30% WACC 10% 1. What is the NPV and IRR for this project. 2. If WACC increases to 12% what will be the NPV and IRR for the project?

Calculus: Early Transcendentals
Calculus: Early Transcendentals
8th Edition
ISBN:9781285741550
Author:James Stewart
Publisher:James Stewart
Chapter1: Functions And Models
Section: Chapter Questions
Problem 1RCC: (a) What is a function? What are its domain and range? (b) What is the graph of a function? (c) How...
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Your firm is contemplating purchasing a new piece of equipment that would allow for additional production. Project details: Equipment cost $82,000, installation cost $8,000. MACRS 3 year. EBITDA has been calculated to be $30,000 year 1, $50,000 year 2, $30,000 year 3. The equipment can be sold at the end of the 3 years for $10,000. Tax rate 30% WACC 10% 1. What is the NPV and IRR for this project. 2. If WACC increases to 12% what will be the NPV and IRR for the project?
Transcribed Image Text:Your firm is contemplating purchasing a new piece of equipment that would allow for additional production. Project details: Equipment cost $82,000, installation cost $8,000. MACRS 3 year. EBITDA has been calculated to be $30,000 year 1, $50,000 year 2, $30,000 year 3. The equipment can be sold at the end of the 3 years for $10,000. Tax rate 30% WACC 10% 1. What is the NPV and IRR for this project. 2. If WACC increases to 12% what will be the NPV and IRR for the project?
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