Your company is considering a project which will require the purchase of $685,000 in new equipment....

Your company is considering a project which will require the purchase of $685,000 in new equipment. The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class. Annual sales from this project are estimated at $244,000. Initial net working capital equal to 30.50% of sales will be required. All of the net working capital will be recovered at the end of the project. The firm requires a 9.25% return on similar investments. The tax rate is 35%, and the project life is 5 years. There are no other operating expenses. Assume the present value of the CCA tax shield is $112,000. What is the project's NPV?

Question 1 options:

	$117,180
	$120,264
	$123,348
	$126,432
	$129,515

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Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

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