Andronicus Corporation has the following jumbled information about an investment proposal: Revenues in each of years 13
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Andronicus Corporation has the following jumbled information about an investment proposal:
Revenues in each of years 1–3 = $39,000 Year 0 initial investment = $59,000 Inventory level = $19,500 in year 1, $21,900 in year 2, and $14,500 in year 3 Production costs = $12,700 in each of years 1–3 Salvage value = $13,900 in year 4 Depreciation = 100% immediate bonus depreciation Tax rate = 21% Customers pay with a 6-month lag
Draw up a set of cash flow forecasts. If the cost of capital is 10%, what is the project’s NPV? Assume that if the project generates losses, those losses can be used to offset profits elsewhere in the business.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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