1. Batinah Water Desalination project is a 15 year project. The project manager estimated that net initial investment expenc in year zero is 100 million rials. The investment will be depreciated on a straight line basis to a 10 million book value by en the project. During the operating phase revenue per year is 35 million and expense per year is estimated to be 20 million ri per year for 15 years. In year 15 net salvage value is estimated to be 15 million. WNACC is estimated to be 10%. Tax Rate 20 1. Calculate annual depreciation expenses 2. Calculate cash flow after tax CFAT in year 5 3. Calculate net present value. 4. Is it a good project

1. Batinah Water Desalination project is a 15 year project. The project manager estimated that net initial investment expenc in year zero is 100 million rials. The investment will be depreciated on a straight line basis to a 10 million book value by en the project. During the operating phase revenue per year is 35 million and expense per year is estimated to be 20 million ri per year for 15 years. In year 15 net salvage value is estimated to be 15 million. WNACC is estimated to be 10%. Tax Rate 20 1. Calculate annual depreciation expenses 2. Calculate cash flow after tax CFAT in year 5 3. Calculate net present value. 4. Is it a good project

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 26P

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