Nyambose Itd is evaluating a project. Projected profit for the first year of the project is...
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Nyambose Itd is evaluating a project. Projected profit for the first year of the project is as follows. The corporate tax rate is 28% Sales Cost of sales R 250 000 150 000 The machinery to be used in the project has a cost of R200 000 and an expected residual value of zero at the end of the four-year project life. The depreciation is included in the cost of sales, and the tax and accounting depreciation is identical. The company's WACC is 18% (a) What is the depreciation charge per year (2 marks) (b) What are the net cash flows for this project in year 0 (2 marks) (d) What is the NPV of this project marks) (c) What will be the net cash flows for this project in year 17 marks) Nyambose Itd is evaluating a project. Projected profit for the first year of the project is as follows. The corporate tax rate is 28% Sales Cost of sales R 250 000 150 000 The machinery to be used in the project has a cost of R200 000 and an expected residual value of zero at the end of the four-year project life. The depreciation is included in the cost of sales, and the tax and accounting depreciation is identical. The company's WACC is 18% (a) What is the depreciation charge per year (2 marks) (b) What are the net cash flows for this project in year 0 (2 marks) (d) What is the NPV of this project marks) (c) What will be the net cash flows for this project in year 17 marks)
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a What is the depreciation charge per year The depreciation charge per year is calculated as follows Depreciation charge per year Cost of machinery Re... View the full answer
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
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