Company ABC is considering a new 5 year project where it will invest in a...
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Finance
Company ABC is considering a new 5 year project where it will invest in a new machine. The key financial data for the project are as follows: The machine will cost $1,250,000. It will last for 5 years and will have no salvage value. Expected revenue per year is $650,000 and total cost per year is 300,000 (depreciation is not included) The straight line depreciation method is used to depreciate the machine The companys tax rate is 25% What is the NPV of the project if the companys cost of capital is 7%?
Select one: a. $82,564 b. $325,000 c. $1,332,564 d. -$942,485
ABC Companys revenue is $140,000.
Its variable cost is $40,000
Its fixed costs is $80,000
It tax rate is 25%
Based on this information, what is its operating leverage?
Select one:
a. 5.0 b. 2.0 c. 1.75 d. 6.3
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