Question
In: Finance
Two Part Question A) A company is considering a new three-year expansion project that requires an...
Two Part Question
A) A company is considering a new three-year expansion project that requires an initial fixed asset investment of $2.55 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,030,000 in annual sales, with costs of $725,000. The tax rate is 35 percent and the required return on the project is 15 percent. What is the project’s NPV?
B) Next, please calculate the following with the given numbers.
Sales: $419,704
Costs: 273,056
Depreciation: 62,100
Taxes: 35%
1) What is the EBIT?
2) Net income?
3) OCF?
4) Depreciation tax shield?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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