Considering selling a product

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Valles Global Industries (VGI) is considering selling a product. The contract sells parts for revenue of $65 million a year for 5 years. Their initial investment is $250 million and the equipment has no salvage at 5 years. They estimate production costs at $8,000, 000 per year. They use straight-line depreciation and pay tax at 48%. If VGI’s After-Tax MARR is 10%, should they do this project? Why?

Reference no: EM13974816

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Considering selling a product : Valles Global Industries (VGI) is considering selling a product. The contract sells parts for revenue of $65 million a year for 5 years. Their initial investment is $250 million and the equipment has no salvage at 5 years. They estimate production co..

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