A project requires the purchase of machinery for $40,000. The machinery belongs in a 20% CCA class and will have a salvage value of $4,000 at the end of the 4-year project. It will require a net working capital investment of $5,000 up-front. The firm has a tax rate of 34% and a required return of 10%. The project generates after-tax operating income of $10,001. What is the project's NPV? Select one: a. -$2,724 b. $1,393 c. $2,394 d. $2,942 e. $881

A project requires the purchase of machinery for $40,000. The machinery belongs in a 20% CCA class and will have a salvage value of $4,000 at the end of the 4-year project. It will require a net working capital investment of $5,000 up-front. The firm has a tax rate of 34% and a required return of 10%. The project generates after-tax operating income of $10,001. What is the project's NPV? Select one: a. -$2,724 b. $1,393 c. $2,394 d. $2,942 e. $881

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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