Straight-line depreciation to zero book value

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Question

Your company may introduce a new line of tennis shoes. You have been given the following projections: sales = 35,000 units at $40 per unit; variable costs = $25 per unit; fixed costs = $125,000 per year; initial investment = $1,000,000; project life = 10 years. What is the net income for this project if the corporate tax rate is 34 percent? You may assume straight-line depreciation to a zero book value and a discount rate of 12 percent.

Reference no: EM133272593

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