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A 10-yr project has an initial cost of $500,000 for fixed assets. The fixed assets will...

A 10-yr project has an initial cost of $500,000 for fixed assets. The fixed assets will be depreciated to a $0 book value using a 20-yr straight line depreciation method. Each year, annual revenue is $50,000 and cost is $15,000. After 10 years, you will terminate the project. You expect to sell the the fixed assets for $350,000. The project is financed by 40% equity and 60% debt. The required rate of return on equity is 7% and the borrowing cost is 3%. Assume the tax rate is 25%.

What is the project's NPV?

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Please upvote if the solution is helpful. In case of doubt ,do comment. Thanks.

jeff jeffy answered 1 year ago
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