User Account

All Pages

Compute the npv of the project

Assignment Help Accounting Basics
Reference no: EM133155461

Question - A machine costs $750 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 $750, 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 $312 per year for 5 years. The first cash flow happens one 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 five years (the machine is worthless), and no required working capital investment.        

Required - Compute the NPV of the project if the discount rate is 9%.

Reference no: EM133155461

Questions Cloud

Ethics and ethical issues in educational environments : Demonstrate understanding of ethics and ethical issues in educational environments and Convey understanding of the impact of policy on the decision making
What is the carrying amount of the investment : The bonds have an effective yield of 14% and are quoted at 105 at year end. What is the carrying amount of the investment at the end of the current year
What is the interest rate per compounding period : An investment of $1 for 8 years at 8% annual interest is compounded quarterly. What is the interest rate per compounding period
Determine the unknown lump sum amount : Using an interest rate of 4.50%, determine the unknown lump sum amount that would make the present value of both prizes equivalent
Compute the npv of the project : The machine will generate operating profits before depreciation (EBITDA) of $312 per year for 5 years. Compute the NPV of the project
Determine the dollar value of the ending inventory : Assuming a beginning inventory of 4,800 units, production of 15,800 units occurred during this quarter, Determine the dollar value of the ending inventory
Create a business profile and record day-to-day transactions : Create a business profile and record day-to-day transactions (including GST) by using MYOB Essentials
What the total amounts distributed to preferred stockholders : The total cash dividend declared this year is $420,000, the total amounts distributed to preferred and common stockholders are, respectively
Calculate the principal payment for year : To finance the expansion, they would take out a $3.95 million loan with an interest rate of 4.15%, Calculate the principal payment for year 14

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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