The firm is considering a new, 7-year project that costs $100,000 today. $30,000 will be expensed today,
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The firm is considering a new, 7-year project that costs $100,000 today. $30,000 will be expensed today, and the rest will be depreciated straight line over the life of the project The project is projected to produce operating revenues of $28,000 per year and costs of $4,000 per year, both starting at t = 1 and both in real dollars. The project requires an increase in working capital today of $12,000. The nominal cost of capital is 12% per year and the projected rate of inflation is 3% per year. The tax rate is 25%. What does the NPV method recommend?
Related Book For
Valuation The Art and Science of Corporate Investment Decisions
ISBN: 978-0133479522
3rd edition
Authors: Sheridan Titman, John D. Martin
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