Question

A firm will cost $750,000 to open. Assuming annual sales of $1 million, variable costs of 35%, fixed costs of $300,000, depreciation of $100,000, and a tax rate of 35%, which of the following gives the NPV of the project over a 10-year horizon (no inflation or salvage value assumed) with a 12% cost of capital. $633.000 $733.000 $833.000 $933.000

          A firm will cost $750,000 to open. Assuming annual sales of $1 million, variable costs of 35%, fixed costs of $300,000, depreciation of $100,000, and a tax rate of 35%, which of the following gives the NPV of the project over a 10-year horizon (no inflation or salvage value assumed) with a 12% cost of capital.
$633.000
$733.000
$833.000
$933.000

A firm will cost 750,000 to open. Assuming annual sales of1 million, variable costs of 35%, fixed costs of $300,000, depreciation of $100,000, and a tax rate of 35%, which of the following gives the NPV of the project over a 10-year horizon (no inflation or salvage value assumed) with a 12% cost of capital.
633.000733.000
833.000933.000

Added by Wesley S.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Akash M

06/20/2023

Step 1

Annual sales: $1,000,000 Variable costs: 35% of $1,000,000 = $350,000 Fixed costs: $300,000 Depreciation: $100,000 Taxable income: $1,000,000 - $350,000 - $300,000 - $100,000 = $250,000 Tax expense: 35% of $250,000 = $87,500 Net income: $250,000 - $87,500 = Show more…

Show all steps

Thanks for your feedback!

Text: A firm will cost $750,000 to open. Assuming annual sales of $1 million, variable costs of 35%, fixed costs of $300,000, depreciation of $100,000, and a tax rate of 35%, which of the following gives the NPV of the project over a 10-year horizon (no inflation or salvage value assumed) with a 12% cost of capital. Please wait until you see the marked answer. $633,000 $733,000 $3,300,000 $933,000