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Title: Suppose a seven-year project requires an initial capital investment of $475,000 and an initial net ... Post by: nevermind11111 on Mar 24, 2024 Suppose a seven-year project requires an initial capital investment of $475,000 and an initial net working capital investment of $25,000. The project is expected to provide operating revenue of $350,000 per year. The associated operating costs are expected to be $150,000 per year. The capital asset belongs to Class 8 and has a CCA rate of 20%. The asset is expected to sell for $36,000 when the project ends. Assume the asset class remains open after the asset is sold and the half-year rule applies in the first year. The firm's marginal tax rate is 40% and cost of capital is 8%. What impact would it have on the project's NPV if the operating costs increase by 5%?
▸ NPV decreases by 10.96%. ▸ NPV decreases by 8.66%. ▸ NPV decreases by 8.96%. ▸ NPV decreases by 8.22%. Title: Re: Suppose a seven-year project requires an initial capital investment of $475,000 and an initial net ... Post by: dasneak on Mar 24, 2024 Content hidden
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