ABC Corp, is considering a new project which data are shown below. The equipment

Question

ABC Corp, is considering a new project which data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. The marketers expect that the project's implementation will decrease the sales volume of firm's existing products by $10000 each year. The profit margin of these products is 25%. What is the project's NPV?

Explanation / Answer

PV = 0.3/1.1 + 0.3/1.1^2 + 0.3/1.1^3 = 0.993989 => $993989

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.