Example 2: Firm ABC is considering to invest in a project to reduce costs by...
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Example 2: Firm ABC is considering to invest in a project to reduce costs by $70,000 annually. The equipment costs $200,000, had a 4-year life (will be depreciated as a 3-year MACRS asset), requires no additional investment in net working capital, and hasa an agevalue of $50,000. The firm's tax rate is 39% and the required return on investments in this risk class is i0%, what is the NPV and IRR of this project? (The MACRS's first three years' depreciation rates in order are: 33.33%, 44.44% and 14.82%,) 11A
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