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Business, 28.11.2019 04:31 randall10

Sub-prime loan company is thinking of opening a new office, and the key data are shown below. the company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. the equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. no change in net operating working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. what is the project's npv? (hint: cash flows are constant in years 1-3.)wacc 10.0%opportunity cost $100,000net equipment cost (depreciable basis) $65,000straight-line depreciation rate for equipment 33.333%annual sales revenues $123,000annual operating costs (excl. depreciation) $25,000tax rate 35%a. $10,521b. $11,075c. $11,658d. $12,271e. $12,885

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