Question: Year 1 Year 2 Year 3 Year 4 Unit sales 4,200 4,100 4,300 4,400 Sales price $29.82 $30.00 $30.31 $33.19 Variable cost per unit $12.15
| Year 1 | Year 2 | Year 3 | Year 4 | |
|---|---|---|---|---|
| Unit sales | 4,200 | 4,100 | 4,300 | 4,400 |
| Sales price | $29.82 | $30.00 | $30.31 | $33.19 |
| Variable cost per unit | $12.15 | $13.45 | $14.02 | $14.55 |
| Fixed operating costs except depreciation | $41,000 | $41,670 | $41,890 | $40,100 |
| Accelerated depreciation rate | 33% | 45% | 15% | 7% |
|
This project will require an investment of $20,000 in new equipment. The equipment will have no salvage value at the end of the projects four-year life. Yeatman pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the projects net present value (NPV) would be when using accelerated depreciation. Determine what the projects net present value (NPV) would be when using accelerated depreciation. $53,097 $55,405 $41,554 $46,171
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