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A firm is considering purchasing a new machine, which costs $500,000 and has a six-year life, a CCA ...

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A firm is considering purchasing a new machine, which costs $500,000 and has a six-year life, a CCA ...

A firm is considering purchasing a new machine, which costs $500,000 and has a six-year life, a CCA rate of 30%, and an expected salvage value of $45,000. The project will generate sales revenue of $200,000 in the first year, which will grow at 5% per year in the subsequent years. Variable costs will be $80,000 for the first year, which will grow at 7% per year. The firm's marginal tax rate is 35% and required return is 10%. What is the project's NPV?

▸ $519,351

▸ $497,546

▸ $12,264

▸ $25,376

Textbook

Corporate Finance

Edition: 5^th

Author: Booth

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viva902 Author

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Thanks for your help!!

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Helped a lot

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You make an excellent tutor!

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