The Juniper Network Company is considering a new 5 -year expansion project that requires an...
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The Juniper Network Company is considering a new 5 -year expansion project that requires an initial fixed investment of $2.5 million. The fixed asset will be depreciated straight line to zero over its five year tax life, after which time it will be worthless. The applicable tax rate is 22%. Estimated annual sales for the project are $2.2 million with annual costs of $1.15mm. The project will also require an initial investment in NWC of $140,000 The tax shield approach is defined as: Using the tax shield approach, OCF for years 1 through 5 are estimated at peryear for the project are $2.2 million with annual costs of $1.15mm. The projec $140,000. is defined as: [ Select ] (Sales + Costs)* Tc + Depreciation * EBIT + DEPRECIATION - TAXES EBIT + TAXES - DEPRECIATION (Sales - Costs) (1 Tc) )+{( Depreciation ) Tc } c) +{(De re estimated at \$ 929,000 [ Select] 929,000 1,149,800 2,000,000 140,000
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