Compute the npv of the project if the discount rate

Assignment Help Finance Basics
Reference no: EM132576857

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

Compute the NPV of the project if the discount rate is 6%

Reference no: EM132576857

Questions Cloud

Prepare statement of profit or loss for financial year : Prepare Statement of Profit or Loss and Other Comprehensive Income for financial year ended 31 December 2018 for Kindex Berhad.
Protections afforded to a whistle blower : What are the protections afforded to a whistle blower?
Proper practice of accounting and finance : What are the laws governing the proper practice of accounting and finance?
Strong educational program : At UC, it is a priority that students are provided with strong educational programs and courses that allow them to be servant-leaders in their disciplines
Compute the npv of the project if the discount rate : Compute the NPV of the project if the discount rate is 6%
Use irac legal problem-solving approach to advise leonard : Use the IRAC legal problem-solving approach to advise Malcolm as to whether he has any contractual obligations to Linda and to Cynthia
How tesla is accounting for warranties : How Tesla is accounting for warranties? Give the justifications of reporting and accounting for warranties at Tesla. Provide the suitable example.
Corporate officials commit fraud : In the AICPA Statements on Standards for Tax Services as well as those set forth under Circular 230 what ethical duties
What are the penalties for corporations : What are the penalties for corporations who fail to file listed transactions to the IRS? What sections of the Internal Revenue Code?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the arithmetic average return

A stock has had returns of ?19.9 percent, 29.9 percent, 34.8 percent, ?11.0 percent, 35.7 percent, and 27.9 percent over the last six years.

  How much will the monthly payments? be

This loan will be paid off over 10 years with? end-of-month payments along with a $60, 000 ?lump-sum payment compounded annually at the end of year 10.

  Studying exposure to political risk

Determine procedure you recommend for a multinational corporation in studying exposure to political risk? What actual strategies can be used to guard against such risk?

  You would like to purchase a treasury bill that has a 10000

you would like to purchase a treasury bill that has a 10000 face value and is 68 days from maturity. the current price

  What is portfolio return

Year-to-date, Conglomco has earned a -1.64 percent return, Supercorp has earned a 5.69 percent return, and Megaorg has earned a 0.23 percent return. If your portfolio is made up of 40 percent Conglomco stock, 30 percent Supercorp stock, and 30 per..

  What should be the value of the equity of the firm

What should be the value of this corporate bond today? What should be its yield to maturity? What should be the value of the equity of the firm?

  British pound contract size

The three-month futures price for the British pound is $1.3160/£. You expect the spot price three months from today to be $1.2690/£.

  Cost of the loan to this canadian firm

What will be the cost of the loan to this Canadian firm if GBP has appreciated to $1.60/£ over the year?

  Company current stock price-zumwalt company

The Zumwalt Company is expected to pay a dividend of $2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate

  Is there an arbitrage opportunity here

It is now January. The current interest rate is 3%. The June futures price for gold is 1246.30, while the December future price is 1251.

  What is the current share price

Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.70, $16.70, $21.70, and $3.50. Afterwards, the company pledges to maintain a constant 5.50 percent growth rate in dividends, forever.

  Calculation of npv of two projects with different lives

Calculation of NPV of two projects with different lives and cash flows and considering a project that has the following cash flow and WACC data

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