You have just started up a new company in NS that produces software for the waste management industry. You need to invest $100,000 immediately to purchase computer equipment (CCA class number 45 with a CCA rate of 45% and no salvage value). The investment is comprised of $50,000 cash and $50,000 from a bank loan charging an effective annual interest rate of 4% with annual payments. If the anticipated operating costs (excluding your salary) are $15,000 per year increasing at 5% per year and the anticipated revenue is $70,000 per year increasing at 3% per year, what constant amount can you withdraw each year as salary ( ver the four-year life of the project if you want to make 5% per year (return on your investment)?

You have just started up a new company in NS that produces software for the waste management industry. You need to invest $100,000 immediately to purchase computer equipment (CCA class number 45 with a CCA rate of 45% and no salvage value). The investment is comprised of $50,000 cash and $50,000 from a bank loan charging an effective annual interest rate of 4% with annual payments. If the anticipated operating costs (excluding your salary) are $15,000 per year increasing at 5% per year and the anticipated revenue is $70,000 per year increasing at 3% per year, what constant amount can you withdraw each year as salary ( ver the four-year life of the project if you want to make 5% per year (return on your investment)?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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