XYZ Inc. is deciding whether to buy a new building. The building will increase cash flows by $6,000,000 per year. The building has a 20-year life and will be obsolete 20 years from today. The building is currently priced at $22 million. The cost of the building will decline by $1,500,000 per year until it reaches 10 million, where it remains until it is obsolete. The required rate of return is 10%. Calculate the NPV of the project, assuming the project is started today. (Round to 2 decimals)
XYZ Inc. is deciding whether to buy a new building. The building will increase cash flows by $6,000,000 per year. The building has a 20-year life and will be obsolete 20 years from today. The building is currently priced at $22 million. The cost of the building will decline by $1,500,000 per year until it reaches 10 million, where it remains until it is obsolete. The required rate of return is 10%. Calculate the NPV of the project, assuming the project is started today. (Round to 2 decimals)
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 8P
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XYZ Inc. is deciding whether to buy a new building. The building will increase cash flows by $6,000,000 per year. The building has a 20-year life and will be obsolete 20 years from today. The building is currently priced at $22 million. The cost of the building will decline by $1,500,000 per year until it reaches 10 million, where it remains until it is obsolete. The required rate of return is 10%. Calculate the NPV of the project, assuming the project is started today. (Round to 2 decimals) |
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