Café Sovrano studies an expansion of Virgin. summary • The company will have to purchase equipment valued at $1,500,000, cost of assembly and installation equaling $100,000. • The project should have an economic life of 5 years. • Can be used as a trade method. • At the start of the project, the company's information, account on account receivable, $80,000 and inventory is sent. It is expected to have an average value of 5 years. • The company expects to achieve sales of 725 thousand dollars during the first two years and 650 thousand dollars in sales during a long period • It is expected to be attached to the project. • The corporate tax rate is 30% • 20% cost of capital What do you recommend?
Café Sovrano studies an expansion of Virgin. summary • The company will have to purchase equipment valued at $1,500,000, cost of assembly and installation equaling $100,000. • The project should have an economic life of 5 years. • Can be used as a trade method. • At the start of the project, the company's information, account on account receivable, $80,000 and inventory is sent. It is expected to have an average value of 5 years. • The company expects to achieve sales of 725 thousand dollars during the first two years and 650 thousand dollars in sales during a long period • It is expected to be attached to the project. • The corporate tax rate is 30% • 20% cost of capital What do you recommend?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 18P
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