Top Posters
Since Sunday
G
4
K
3
o
3
3
m
2
c
2
r
2
p
2
s
2
s
2
b
2
c
2
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
ia45122 ia45122
wrote...
Go to Answer
Posts: 125
Rep: 0 0
4 months ago
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%.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
Author:
Read 32 times
1 Reply
Replies
Answer verified by a subject expert
dangoondangoon
wrote...
#1
Posts: 132
Rep: 0 0
4 months ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

ia45122 Author
wrote...

4 months ago
this is exactly what I needed
rudy.zondo
wrote...

Yesterday
This helped my grade so much Perfect
mkyoungs
wrote...

2 hours ago
Thanks
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1265 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 1163
  
 178
  
 301
Your Opinion
Do you believe in global warming?
Votes: 423
Previous poll results: How often do you eat-out per week?