A company that decides to value a project in which it wants to enter, presents the information in Figure 1. In addition, the investment in assets for 400 (Depreciable in straight line) and sale at the end for 205 value. Tax rate of 35%. What is the NPV of the project, if the WACC is 15% A.E.

A company that decides to value a project in which it wants to enter, presents the information in Figure 1. In addition, the investment in assets for 400 (Depreciable in straight line) and sale at the end for 205 value. Tax rate of 35%. What is the NPV of the project, if the WACC is 15% A.E.

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter26: Cost Allocation And Activity-Based Costing

Section: Chapter Questions

Problem 7DQ

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Question

Or. Profit
tax
Net Income
ferod
Depreciation
80
200
to
130
7
80
100
35
65
975
136,5
80
150
3.
B0
Z10
73,5
4

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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