nc is evaluating a new product. The production line for the new product would be set up in an unused plant, which was purchased one year ago at $300,000. The machinery will cost $200,000. The company's inventories would have to be increased by $25,000 to handle the new line and will reverse when the machine is sold. The machinery is in class 43 with a depreciation rate of 25%. The project is expected to last 3 years with estimated EBIT of $180,00 in each year. The machinery has an expected salvage value of $25,000 at the end if three years. The companys tax rat
nc is evaluating a new product. The production line for the new product would be set up in an unused plant, which was purchased one year ago at $300,000. The machinery will cost $200,000. The company's inventories would have to be increased by $25,000 to handle the new line and will reverse when the machine is sold. The machinery is in class 43 with a depreciation rate of 25%. The project is expected to last 3 years with estimated EBIT of $180,00 in each year. The machinery has an expected salvage value of $25,000 at the end if three years. The companys tax rat
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 4P: Although the Chen Company’s milling machine is old, it is still in relatively good working order and...
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Alpha Inc is evaluating a new product. The production line for the new product would be set up in an unused plant, which was purchased one year ago at $300,000. The machinery will cost $200,000. The company's inventories would have to be increased by $25,000 to handle the new line and will reverse when the machine is sold. The machinery is in class 43 with a depreciation rate of 25%. The project is expected to last 3 years with estimated EBIT of $180,00 in each year. The machinery has an expected salvage value of $25,000 at the end if three years. The companys tax rate is 30% and its WACC is 10%. What is the
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