A new product is being considered by Brooks’ Books, Inc. The after-tax cash flows at time zero include an outlay for depreciable equipment (I0) of $16M (M = million) and $2.2M for additional net working capital (ΔW). The project is expected to have an 8-year life (n=8), and the equipment will be depreciated on a straight-line basis to a zero-book value (B=0) over 8 years. When the project terminates in eight years, it is anticipated that the market or salvage value (S) will be $2M and the net working capital will be released. The cash flows before tax (CFBTt) for the project are expected to be $5M per year. The cost of capital (r) is 16%, and the relevant tax rate (T) is 35%. Answer the below questions.
(1) What are the initial costs (CF0)?
(2) What is the after-tax value of the revenues minus expenses for each year (CFBTt)?
(3) What is the depreciation tax shield per year (DTSt)?
(4) What at the cash flows after tax for ĺleach year (CFATt)?
(5) What is the net salvage value (NSV)(6) What is the terminal value (TVn)?
(7) What is the NPV?
(8) Do we accept the project?
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this is the good quality and good job for you guys in this country for a while now but it's not a good idea for you guys to do this ok
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