Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that...
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Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5- year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the second decimal place. Risk-adjusted WACC = 8.6% Net investment cost (depreciable basis) = $140,000 Straight-line depreciation rate = 20.00% per year Cash Sales revenues, each year = $71,000 : Annual cash operating costs (excluding depreciation) = $25,000 : Tax rate = 22.0% Cookie Cutter Corp. is considering a new project whose data are shown below. The equipment that would be used has a 5-year tax life, would be depreciated by the straight-line method over its 5-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 5- year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the second decimal place. Risk-adjusted WACC = 8.6% Net investment cost (depreciable basis) = $140,000 Straight-line depreciation rate = 20.00% per year Cash Sales revenues, each year = $71,000 : Annual cash operating costs (excluding depreciation) = $25,000 : Tax rate = 22.0%
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To calculate the Net Present Value NPV we need to determine the annual cash flows discount them to t... View the full answer
Related Book For
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott
Posted Date:
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