question 8

XYZ is evaluating the Reno project. The project would require an initial investment of $130,000 that would be depreciated to $15,500 over 6 years using straight-line depreciation. The project is expected to have operating

cash flows of $49,600 per year forever. XYZ expects the project to have an after-tax terminal value of $387,000 in 3 years. The tax rate is 30%. What is (X+Y)/Z if X is the project's relevant expected cash flow in year 3, Y is

the project's relevant expected cash flow in year 6, and Z is the project's relevant expected cash flow in year 2?

O A number less than 8.30 or a rate greater than 13.36

O A number equal to or greater than 10.08 but less than 11.55

O A number equal to or greater than 11.55 but less than 12.28

O A number equal to or greater than 8.30 but less than 10.08

O A number equal to or greater than 12.28 but less than 13.36