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deodeo deodeo
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2 weeks ago
Delta Corporation is considering an investment of $400,000 in a new machine, which belongs to asset class 43 with a CCA rate of 30%. The machine is not the only asset in the asset class. The firm's effective tax rate is 40%. The company has the following estimates:

Base caseBest caseWorst case
Project life6 years8 years4 years
Discount rate (k)10%8%12%
Salvage value$50,000$60,000$40,000
Annual after-tax operating cash flows$80,000$100,000$60,000
a)
Determine the NPV for each scenario.
b) Would you recommend the company to undertake the project if each scenario
is equally likely? Why?
Textbook 
Corporate Finance

Corporate Finance


Edition: 5th
Author:
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dorkiexcicidorkiexcici
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