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Title: Suppose a seven-year project requires an initial capital investment of $475,000 and an initial net ... Post by: ia45122 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 accelerated investment incentive is applicable for CCA in year 1. 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 7.94%. ▸ NPV decreases by 8.22%. ▸ NPV increases by 7.94%. ▸ NPV increases by 8.22%. Title: Re: Suppose a seven-year project requires an initial capital investment of $475,000 and an initial net ... Post by: dangoon on Mar 24, 2024 Content hidden
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