The investment will be depreciated straight line

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Reference no: EM131445323

You have been given the following information on a project:

It has a 3-year lifetime

The initial investment in the project will be $21 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 5% a year after that for the remaining two (0) years.

The cost of goods sold, excluding depreciation, is expected to be 56% of revenues.

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

Reference no: EM131445323

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