The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life: Capital investment is $1,000,000. The cost of depreciable property, which is part of the $1,000,000 total estimated project cost, is $650,000. The depreciable property is categorized in CCA 30% class, with 50% rule applicable. The project analysis period is 3 years. Annual operating and maintenance expenses are $636,000 in the first year, and then increase at the rate of 5% per year. The company expects to make $1,250,000 of revenue from the sales of the new product. Estimated salvage value of depreciable property at the end of three years is $280,000. Corporate taxes are 40% MARR is 15% per year. Solve the question on Exel. Calculate a 3-Year cash flow statement for the project, and then calculate the following two questions listed below using Excel: The Net Present Value of the project The IRR of the project
The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life: Capital investment is $1,000,000. The cost of depreciable property, which is part of the $1,000,000 total estimated project cost, is $650,000. The depreciable property is categorized in CCA 30% class, with 50% rule applicable. The project analysis period is 3 years. Annual operating and maintenance expenses are $636,000 in the first year, and then increase at the rate of 5% per year. The company expects to make $1,250,000 of revenue from the sales of the new product. Estimated salvage value of depreciable property at the end of three years is $280,000. Corporate taxes are 40% MARR is 15% per year. Solve the question on Exel. Calculate a 3-Year cash flow statement for the project, and then calculate the following two questions listed below using Excel: The Net Present Value of the project The IRR of the project
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 15P
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The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life:
- Capital investment is $1,000,000.
- The cost of
depreciable property, which is part of the $1,000,000 total estimated project cost, is $650,000. - The depreciable property is categorized in CCA 30% class, with 50% rule applicable.
- The project analysis period is 3 years.
- Annual operating and maintenance expenses are $636,000 in the first year, and then increase at the rate of 5% per year.
- The company expects to make $1,250,000 of revenue from the sales of the new product.
- Estimated salvage value of depreciable property at the end of three years is $280,000.
- Corporate taxes are 40%
- MARR is 15% per year.
Solve the question on Exel.
Calculate a 3-Year cash flow statement for the project, and then calculate the following two questions listed below using Excel:
- The
Net Present Value of the project - The IRR of the project
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