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wrote...
Posts: 208
A month ago
Use the information for the question(s) below.

Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane.  THSI will lease space in this facility to various agencies and groups providing relief services to the area.  THSI estimates that this project will initially cost $5 million to set up and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million.  THSI will require no working capital for this investment.  THSI's marginal tax rate is 35%.  


Assume that THSI's cost of capital for this project is 15%.  The net present value (NPV) of this temporary housing project is closest to:

▸ -$435,000

▸ -$650,000

▸ $435,000

▸ $1,960,000
Textbook 

Fundamentals of Corporate Finance


Edition: 2nd
Authors:
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wrote...
Posts: 251
A month ago
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$435,000
1
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wrote...
A month ago
Thank you for answering so quickly
wrote...
A month ago
Was feeling bored, my pleasure Grinning Face with Smiling Eyes
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