A company is considering purchasing an asset for 60000 that, Ask an Expert

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A company is considering purchasing an asset for $60,000 that would have a useful life of 5 years and would have a salvage value of $7,000. For tax purposes, the entire original cost of the asset would be depreciated over 5 years using the straight-line method and the salvage value would be ignored. The asset would generate annual net cash inflows of $27,000 throughout its useful life. The project would require additional working capital of $1,000, which would be released at the end of the project. The company's tax rate is 30% and its discount rate is 10%.

Required:

What is the net present value of the asset?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9799311

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