CORPORATE FINANCE
CORPORATE FINANCE
12th Edition
ISBN: 9781307702804
Author: Ross
Publisher: MCG/CREATE
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Chapter 6, Problem 29QAP
Summary Introduction

Adequate information:

Expected sales in Year 1=7,100 units

Expected sales in Year 2=7,900 units

Expected sales in Year 3=9,200 units

Expected sales in Year 4=6,100 units

Selling price per unit=$305

Fixed costs per year = $375,000

Variable costs= 15% of sales

Cost of equipment =$3,400,000

Scrap value= $310,000

Net working capital required= $225,000

Tax rate=23%

Rate of return=13%

To compute: New NPV in case the fixed asset qualifies for 100 percent bonus depreciation

Introduction: Net present value is a technique to evaluate different investment proposals and select the best one. It is representing the difference between the present value of cash outflows and the present value of cash inflows.

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Chapter 6 Solutions

CORPORATE FINANCE

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