Question: Lucy Model. The first Capex is $160,000 - depreciated using 5-year MACRS method. This was $120,000 and used a 10-year MACRS method. The revenue figures

Lucy Model.

The first Capex is $160,000 - depreciated using 5-year MACRS method. This was $120,000 and used a 10-year MACRS method.

The revenue figures should be $25,000 higher in every year.

The variable cost is now 30% of revenue.

The Fed Tax Rate has changed. New tax rate is 32%

The firms before tax cost of capital has changed - it is now 18%.

The terminal value of the project assets has changed. It is now $25,000.

What is the After Tax MARR?

What is the discounted after tax cash flow for year 4?

What is the projects discounted pay back?

Lets say there is an additional Capex required at the end of year 4 for $50,000 and it is depreciated using 7-year MACRS method. What happens to NPV and IRR

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