Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. company x is planning to add another project, whic

Company X is planning to add another project, which will generate $150,000 annual revenue for...

80.2K

Verified Solution

Question

Finance

Company X is planning to add another project, which will generate $150,000 annual revenue for the company in the next 4 years, with operating costs of $45,000 per year. To take this new project, the company has to purchase a new equipment with a price of $150,000, along with $20,000 shipment fee. Additionally, the company need to add additional $40,000 in net working capital. The equipment will be depreciated using 3-year MACRS depreciation method (3-year MACRS depreciation rates are showing below). The company thinks the equipment could be sold out by the end of year 4 for $21,000. With a tax rate of 20% and required return of (11)%, should the company take this project or not? Why? (Please show both NPV and IRR decisions).

3-year MACRS

1 33.33%

2 44.45%

3 14.81%

4 7.41%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

23 All of the following are at risk effects of youth who are detained and...

Basic Math
1.2K views

What number must you add to complete the square?x^2+8x=50

Algebra
1.2K views

An observer for a radar station is located at the origin of a coordinate system...

Algebra
1.2K views

Let f x x 2 x 1 a Enter the domain of f g x...

Algebra
1.2K views

15 Convert to standard form y 7x 17 x 16 Solve the inequality set Graph...

Algebra
1.2K views

Homework 10 22 1 Car prices for a certain car are projected to increase 125...

Accounting
1.2K views

can you show work for even the parts i have correct please ...

Accounting
1.2K views

Consider the economic incidence of a national tax on capital. Discuss the effects of the...

Accounting
1.2K views

On January 1, 2025, Oriole Corporation had the following stockholders' equity accounts. During 2025, the...

Accounting
1.2K views

Crane Corp. has the following beginning-of-the-year present values for its projected benefit obligation and market-related...

Accounting
1.2K views

Question 1: Transactions completed by Boating Corporation during the fiscal year 2023: ...

Accounting
1.2K views

Alyeska Services Company, a division of a major oil company, provides various services to the...