Final Exam_Financial Management_Problems -...

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Your test grade is 100%The professor has configured this test to allow students to:Show Questions Answered CorrectlyShow Questions Answered IncorrectlyShow All Responses Selected By StudentShow What The Correct Response Should BeQUESTION:1[QUESTION BANK ID:269631]TYPE:MULTIPLE CHOICECORRECTThomson Media is considering some new equipment whose data are shown below. The equipment has a 3-year tax life and would be fully depreciated by the straight-line method over 3 years, but it would have apositive pre-tax salvage value at the end of Year 3, when the project would be closed down. Also, some new working capital would be required, but it would be recovered at the end of the project’s life. Revenuesand other operating costs are expected to be constant over the project’s 3-year life. What is the project’s NPV?  WACC10.0%Net investment in fixed assets (depreciable basis)$70,000Required new working capital$10,000Straight-line deprec. rate33.333%Sales revenues, each year$75,000Operating costs $30,000
(excl. deprec.), each yearExpected pretax salvage value$5,000Tax rate35.0%<< HIDE ANSWERS

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