Today ABC Corp. starts a project that requires it to invest in new equipment of $826,000. Doing
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Question:
Today ABC Corp. starts a project that requires it to invest in new equipment of $826,000. Doing so will earn ABC pre-tax cash flows of $153,000 annually over 8 years. The equipment has a salvage value of $127,000. ABC's cost of capital is 9.20%, and its tax rate is 35%. The equipment falls into the 20% CCA class (half year rule applies). What is the NPV of the project?
Question 11Answer
a.
$174,615
b.
-$105,015
c.
-$216,821
d.
-$42,206
e.
-$27,149
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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