A proposed cost-saving device has an installed cost of 360,000. The device will be used in a
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A proposed cost-saving device has an installed cost of
£360,000. The device will be used in a 5-year project and be depreciated using the reducing balance method at 20 per cent per annum. The required initial net working capital investment is £20,000, the marginal tax rate is 24 per cent, and the project discount rate is 12 per cent.
The device has an estimated year 5 salvage value of £60,000. What level of pre-tax cost savings do we require for this project to be profitable?
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Related Book For
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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