Calculate npv at discount rate

Assignment Help Business Management
Reference no: EM132572319

Consider the below data and calculate NPV at 6% discount rate:

-A machine costs $600 today (year 0). Assume this investment is fully tax-deductible, as stipulated by the new US corporate tax code of 2018.

-This company has current pre-tax profits from other projects that are greater than $600, so it can take full advantage of the investment tax break above in year 0.

-The machine will generate operating profits before depreciation (EBITDA) of $250 per year for 4 years. The first cash flow happens at the end of the first year after the machine is put in place (year 1).

-Depreciation is not tax-deductible. Notice that you do not need to calculate depreciation at all to solve this problem since it has no effect on taxes.

-The tax rate is 21%

-There is no salvage value at the end of the four years (the machine is worthless), and no required working capital investment.

Reference no: EM132572319

Questions Cloud

Employee turnover and future staffing needs : How does a high employee turnover rate impact the operations in a healthcare organization? What additional data might HRM gather?
SBM4305 IS Project Management Assignment : SBM4305 IS Project Management Assignment Help and Solution, Asia Pacific International College - Assessment Writing Service
Permanently restricted and temporarily restricted net assets : What is the difference between permanently restricted and temporarily restricted net assets?
Compute the expected cash to be collected from customers : The expected sales for July are $500,000, August $300,000 and September $400,000. Compute the expected cash to be collected from customers
Calculate npv at discount rate : A machine costs $600 today (year 0). Assume this investment is fully tax-deductible, as stipulated by the new US corporate tax code of 2018.
Define what is meant by outsourcing : Define what is meant by outsourcing. Discuss which company you would outsource to and why. Does distance matter?
What is Freds gift to Terri : What is Fred's gift to Terri? Does the gift qualify for the annual exclusion? If Madison is Fred's wife, does the gift to her generate a marital deduction
What stage of culture shock is kelly family experiencing : Explain the clashes in culture, customs, and expectations that occurred in this situation. What stage of culture shock is Kelly's family experiencing?
Calculate the cost of the car if he made a downpayment : Lionel secured a 5-year car lease at 5.30% compounded annually that required him to make payments of $886.02 at the beginning of each month

Reviews

Write a Review

Business Management Questions & Answers

  Factors that can hinder us from receiving accurate

What are factors that can hinder us from receiving accurate information. Explain four examples in detail.

  Discuss several advantages of linear programming

Discuss several advantages of linear programming; clearly explain the reasons for your choices

  How do big orgs really need security policies

How do BIG orgs really need security policies? Why do we need security policies?

  Development of a strategic plan for a business

Is strategic planning as important for a small company as for a large company? Why or why not? How would you approach the development of a strategic plan for a business you own

  Identify and explain key concepts of emerging technologies

Identify and explain key concepts of emerging technologies, highlighting their use and availability for emerging and developed markets.

  Examine the most common differences affecting employees

BUS 322- Examine the most common differences affecting employees with organizations and give two specific examples of techniques that managers can use to effectively capitalize on the individual differences.

  Approach used to prevent medical errors

Prepare a 5-8 slide Power Point presentation that describes what constitutes a medical error and describe one approach used to prevent medical errors.

  What advice would you give to foreigners

What advice would you give to foreigners entering into negotiations with Chinese negotiators while taking into account Chinese cultural values, yet not falling back on cultural stereotypes which may be based on outdated or biased observations

  Utility function that can represent alice preferences

(a) Write a utility function that can represent Alice's preferences. (Hint: Try one of the 'types' of utility functions we have seen in lecture) (b) Write another one.

  Develop a complete business case for an idea

Develop a complete business case for an idea. This may be a real example from your work environment or a fictional example from anywhere you choose.

  Evaluate the business-level strategy of victory motorcycles

Evaluate the business-level strategy of Victory Motorcycles to determine whether you believe the strategy is appropriate to offset forces in the industry. Provide specific examples to support your response.

  Suppliers in the time of material shortages

How does general and industry environment affects the suppliers in the time of material shortages, unions and lack of substitute?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd