4. A warehouse is currently sitting empty, but can be rented out to a third pe $100,000 a year. A project is proposed in the warehouse by your company which will require an investment of $200,000 and will be depreciated using MACRS over a five yea life. At the end of the project in THREE YEARS, the machinery will be sold for $50,000. Products sold will be 20,000 units per year at $30 each. Variable costs will be 35 percent of sales. Fixed costs (not counting the warehouse) will be $20,000 per year. Working capital will be $50,000. The tax rate is 30 percent. If the interest rate is 10 percent, what is NDY of this project?

4. A warehouse is currently sitting empty, but can be rented out to a third pe $100,000 a year. A project is proposed in the warehouse by your company which will require an investment of $200,000 and will be depreciated using MACRS over a five yea life. At the end of the project in THREE YEARS, the machinery will be sold for $50,000. Products sold will be 20,000 units per year at $30 each. Variable costs will be 35 percent of sales. Fixed costs (not counting the warehouse) will be $20,000 per year. Working capital will be $50,000. The tax rate is 30 percent. If the interest rate is 10 percent, what is NDY of this project?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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