ABC company has a budgeting project. Machinery costs $60,000,000 with a 6 year life. Sales are $50,000,000 each year for 6 years. Cost of goods sold is $30,000,000 a year with depreciation expense. Marginal Tax Rate is 30%. What is the NPV of the project if the cost of capital is 12%? What is the IRR?

EBK CFIN
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ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter9: Capital Budgeting Techniques
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ABC company has a budgeting project. Machinery costs $60,000,000 with a
6 year life. Sales are $50,000,000 each year for 6 years. Cost of goods sold
is $30,000,000 a year with depreciation expense. Marginal Tax Rate is 30%.
What is the NPV of the project if the cost of capital is 12%? What is the IRR?
Transcribed Image Text:ABC company has a budgeting project. Machinery costs $60,000,000 with a 6 year life. Sales are $50,000,000 each year for 6 years. Cost of goods sold is $30,000,000 a year with depreciation expense. Marginal Tax Rate is 30%. What is the NPV of the project if the cost of capital is 12%? What is the IRR?
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