Suppose a 10-year project requires the following initial investment costs. Building: -Lasts for 10 years -...
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Suppose a 10-year project requires the following initial investment costs. Building: -Lasts for 10 years - Initial cost of $60,000 Equipment - Last for 8 years - Initial cost $15,000 Vehicles: - Last for 5 years - Initial cost of $45,000 Assume the investor is using the straight-line depreciation method. The project earns annual revenue of $65,000 and pays an annual operating cost of $12,000. Assume a 5% discount rate, 25% tax rate, and ignore salvage value of assets. Please round ALL answers to two decimals. Do not include any commas (,) "$" or "96" in your answers. Market CBA Perspective: The Market NPV is $ and the Market IRR is $ Private/Investor CBA Perspective: The Private Perspective NPV of this project is $ and the Private Perspective IRR of this project is 96. If the discount rate equals the borrowing rate of the fund, using the IRR rule, the investor should (accept/reject) the project. Suppose a 10-year project requires the following initial investment costs. Building: -Lasts for 10 years - Initial cost of $60,000 Equipment - Last for 8 years - Initial cost $15,000 Vehicles: - Last for 5 years - Initial cost of $45,000 Assume the investor is using the straight-line depreciation method. The project earns annual revenue of $65,000 and pays an annual operating cost of $12,000. Assume a 5% discount rate, 25% tax rate, and ignore salvage value of assets. Please round ALL answers to two decimals. Do not include any commas (,) "$" or "96" in your answers. Market CBA Perspective: The Market NPV is $ and the Market IRR is $ Private/Investor CBA Perspective: The Private Perspective NPV of this project is $ and the Private Perspective IRR of this project is 96. If the discount rate equals the borrowing rate of the fund, using the IRR rule, the investor should (accept/reject) the project.
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The initial investment costs for the project are Building 60000 Equipment 15000 Vehicles 45000 Total initial investment 60000 15000 45000 120000 The a... View the full answer
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Posted Date:
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