Question: Please show work, so i can figure it out on my own next time! corporate finance chapter 12. A-Z Sub-Prime Loan Company is thinking of
Please show work, so i can figure it out on my own next time! corporate finance chapter 12. A-Z Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No change in net operating working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) Do not round the intermediate calculations and round the final answer to the nearest whole number. WACC 10.096 Opportunity cost $100,000 Net equipment cost (depreciable basis) 565.000 Straight-line depr. rate for equipment 33.33396 Annual sales revenues $128,000 Annual operating costs (excl. depr.) $25,000 3596 Tax rate a. $21,575 b. $21,168 C. $22,592 d. $20.353 e. $17,707 h w
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
