Estimate pre-tax return on capital

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Reference no: EM131815940

You have been given the following information on a project:

It has a 3-year lifetime

The initial investment in the project will be $28 million, and the investment will be depreciated straight line, down to a salvage value of $9 million at the end of the fourth year.

The revenues are expected to be $24 million next year and to grow 6% a year after that for the remaining two (0) years.

The cost of goods sold, excluding depreciation, is expected to be 57% of revenues.

Estimate the pre-tax return on capital, by year and on average, for the project.

(Answer format is a zero, a decimal point, then 4 digits, for example 0.1234)

Reference no: EM131815940

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