Question: A project will cost $4,819,724 and it is expected to earn zero after one year, but $3,009,913 at the end of the second year and
A project will cost $4,819,724 and it is expected to earn zero after one year, but $3,009,913 at the end of the second year and $2,779,333 at the end of the third year. Your company currently has borrowings worth $73,789,532 for which the company is paying 7.4 % per year interest, and the owners of the company have invested a total of $149,815,110.40; and they generally want a return of 20% per year. Corporate tax rate is at 40%. . Is this a good project or not? How much excess percent return/loss will your company have if you go ahead with this project
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