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What is the net present value of the investment

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Reference no: EM132594855

Question - Galveston Corporation is considering an investment in equipment for $45,000. Data related to the investment are as follows:

Cash Flow before Year Depreciation and Taxes

1 $30,000

2 30,000

3 30,000

4 30,000

5 30,000

Cost of capital is 18 percent.

Galveston uses the straight-line method of depreciation with no mid-year convention. In addition, their tax rate is 40 percent, and the life of the equipment is five years with no salvage value.

What is the net present value of the investment?

Reference no: EM132594855

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