Christine wants to make and sell custom tiles as a 5-year side-business and is considering buying...

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Christine wants to make and sell custom tiles as a 5-year side-business and is considering buying tile-making machinery that costs $15,000. The machinery can be sold for $10,000 at the end of the 5 year project. (These numbers can be used to calculate annual depreciation expense). Christine expects this project to generate $12,000 in net income after tax for each of the next 5 years. At the end of the 5th year, Christine plans to end the project and sell the machinery for $10,000. Assuming a discount rate of 10%, what is the NPV of this project? Christine wants to make and sell custom tiles as a 5-year side-business and is considering buying tile-making machinery that costs $15,000. The machinery can be sold for $10,000 at the end of the 5 year project. (These numbers can be used to calculate annual depreciation expense). Christine expects this project to generate $12,000 in net income after tax for each of the next 5 years. At the end of the 5th year, Christine plans to end the project and sell the machinery for $10,000. Assuming a discount rate of 10%, what is the NPV of this project?

Answer rating: 100% (QA)

2 4 8 9 10 11 12 13 14 15 16 17 016 YEARS CASH FLOW 0 1 2 3 45 sssssss es is e YEARS 1200000 2200... View the full answer