Question: PLEASE ANSWER FAST !!! dunaway industries is evaluating the idea of expanding their production facility in cobb county. the cfo gathered the following data. -dunaway

PLEASE ANSWER FAST !!!
dunaway industries is evaluating the idea of expanding their production facility in cobb county. the cfo gathered the following data.
-dunaway industries spent $500,000 researching other sites for there expansion,
-the equipment needed for the expansion will cost $25,600,000 fully installed. the industries used straight-line depreciation. if dunaway accepts the project, the company will sell the equipment for salvage value at the end of the life of the project.
-if dunaway industries adds the new equipment, sales are expected to increase by $17,400,000 and costs are expected to increase by $10,000,000.
-the appropriate tax rate for dunaway indjstries is 30%
- the capital of the firm includes 70% of equity and 30% of debt.
-dunaway industries recently issued a bond with 30 years to maturity that pays a coupon of 7.50% semi annually. the $1,000 par bond sold for $956.77.
-the market believes that dunaway industries will pay a dividend of $2.42 on their common stock next year and that the dividend will grow at 4% forever. the current stovk price is $22.00.
what is the depreciation expense per year created by the project ?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!