What is the net present value of this project

Assignment Help Accounting Basics
Reference no: EM133171776

Question - An investor is considering an investment in a cellphone manufacturer. The following information is available:

A. The investment will generate an annual pre-tax profit of $50,000 over 3 years. Costs for depreciation are included in the pre-tax profit.

B. Equipment costing $400,000 will be required immediately. The equipment will be straight line depreciated over 3 years, has a salvage value of $100,000 and is subject to normal tax rules for equipment.

C. The tax rate is 35%, and the CCA rate on equipment is 20%.

D. The investor is also considering a similar investment that will generate an after tax return of 10%.

Required - What is the Net Present Value of this project and what qualitative factors should be considered in assessing this proposal?

Reference no: EM133171776

Questions Cloud

What is one domestic policy that you would change : What is one domestic policy that you would change? Why?
Compute the net pay for both kayla and paula : Paula earns a weekly salary of $1,150. Paula's federal income tax withholding is 17 percent of her gross pay. Compute the net pay for both Kayla and Paula
Accuracy and speed of research projects : What are some of the educational claims of popular tablets, laptops, and mobile devices? Do you believe that these claims are valid? Can such devices increase a
Options for netflix and whole foods : Netflix employees can choose from a mix of stock options and salary, and Whole Foods employees can vote on the benefits they want according to need
What is the net present value of this project : What is the Net Present Value of this project and what qualitative factors should be considered in assessing this proposal
Gaining and sustaining a competitive advantage : Please read the article :" Walmart Stores: Gaining and sustaining a competitive advantage" and answer the question.
How much are mitchell period costs : Mitchell Company reports the following costs for the year: Direct materials used: $170,000. How much are Mitchell period costs
Healthcare policy affecting healthcare access : Which important healthcare policy affecting healthcare access would you as a healthcare executive or policymaker want to focus on immediately?
Calculate the price and quantity variances for materials : The expected production for January 2021 for its flagship large size sponge cake was 150, Calculate the price and quantity variances for materials

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd