Top Posters
Since Sunday
g
3
3
2
J
2
p
2
m
2
h
2
s
2
r
2
d
2
l
2
a
2
New Topic  
chief333 chief333
wrote...
Posts: 135
Rep: 0 0
3 weeks ago
Suppose a five-year project requires an initial capital investment of $600,000 and an initial net working capital investment of $30,000. The project is expected to provide operating revenue of $400,000 per year. The associated operating costs are expected to be $175,000 per year. The capital asset belongs to Class 7 and has a CCA rate of 15%. The asset is expected to sell for $168,000 when the project terminates. Assume the asset class remains open after the project ends and that the half-year rule applies in the first year. The firm's marginal tax rate is 40% and cost of capital is 10%. What impact would it have on the project's NPV if the operating revenue falls by 5%?

▸ NPV decreases by 63.51%.

▸ NPV decreases by 38.84%.

▸ NPV decreases by 46.19%.

▸ NPV decreases by 21.85%.
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
Author:
Read 17 times
1 Reply
Replies
Answer verified by a subject expert
crazyali16crazyali16
wrote...
Posts: 138
Rep: 1 0
3 weeks ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
This verified answer contains over 4990 words.
1

Related Topics

chief333 Author
wrote...

3 weeks ago
Thank you, thank you, thank you!
wrote...

Yesterday
Smart ... Thanks!
wrote...

2 hours ago
Correct Slight Smile TY
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  690 People Browsing
Related Images
  
 605
  
 377
  
 252
Your Opinion

Previous poll results: What's your favorite math subject?