Question

Asked Oct 27, 2019

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Help please not sure how to . And also how do I set this up using excel. Pearson Corporate Finance book 4th edition stand alone by Berk.

Step 1

In order to find out if the investment should be made in the new ide, first the cash flow for each year needs to be determined and then net present value will be calculated. IF NPV is positive, investment should be made as it would add value to the company.

First, Net Income of the company would be created for four years as follows:

Note: Depreciation = $60 million / 4 = $15 million each year.

Step 2

Second, Salvage value at the end of 4 years is $5 million, whereas the book value is zero. Therefore, gain on sale of new ride is

Step 3

Third, Cash Flow statement and ...

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