A proposed cost-saving project requires a device with an installed cost of $540,000. The project will last
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A proposed cost-saving project requires a device with an installed cost of $540,000. The project will last for five years. The device has a CCA rate of 20%. The required initial net working capital investment is $20,000, the marginal tax rate is 37%, and the required return on the project is 11%. The device has an estimated salvage value of $95,000 at the end of Year 5, and the net working capital investment will also be recovered at the end of Year 5. What level of pre-tax cost savings do we require for this project to be profitable?
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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