Question: Please provide excel spreadsheet (physical copy) or hand written solution with formulas. Firm A is considering a new project which requires an initial cash outlay
Please provide excel spreadsheet (physical copy) or hand written solution with formulas.
Firm A is considering a new project which requires an initial cash outlay of $11 million today, the investment involves the purchase of class 10 equipment with a CCA rate of 30%, and the equipment costs $10 million. The rest of the money, $1 million, will be paid to a consulting firm who helps the company do a feasibility study of the new project. Revenues less expenses (S-E) from this project are expected to be $3 million per year for 6 years. The project requires an immediate $200,000 increase in Net Working Capital (NWC) and the NWC will remain at the same level for the rest of the life of this project. Suppose the corporate tax rate and required rate of return are 35% and 10%, respectively. Determine the NPV of the project. And shall we accept or reject the project?
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
