Jessica's at Boulder jewelry store is considering expanding its operations. The expansion will require new equipment costing $651,000 that would be depreciated on a straight-line basis to zero over the 5-year ife of the project. The equipment will have a market value of $169,000 at the end of the project. The project requires $39,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow (pre-tax) will be $165,300 a year. What is the net present value of this project if the relevant discount rate is 13 percent and the tax rate as 35 percent?

Jessica's at Boulder jewelry store is considering expanding its operations. The expansion will require new equipment costing $651,000 that would be depreciated on a straight-line basis to zero over the 5-year ife of the project. The equipment will have a market value of $169,000 at the end of the project. The project requires $39,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow (pre-tax) will be $165,300 a year. What is the net present value of this project if the relevant discount rate is 13 percent and the tax rate as 35 percent?

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Description: ang Enabled ExJessica's at Boulder jewelry store is considering expanding its operations. The expansion will require new equipment costing $651,000 that would be depreciated on a straight-line basisto zero over the 5-year life of the project. The eq

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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