Gaston Company is considering a capital budgeting project that would require a $2,400,000 investment in...
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Gaston Company is considering a capital budgeting project that would require a $2,400,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after-tax cost of capital is 16%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows Sales Variable expenses Contribution margin Fixed expenses Advertising, salaries, and other fixed out-of-pocket costs $ 3,200,000 1,720,000 1,480,000 540,000 480,000 Depreciation Total fixed expenses Net operating income 1,020,000 $ 460,000 Click here to view Exhibit 8B-1 and Exhibit 88-2, to determine the appropriate discount factor(s) using tables Required Compute the project's net present value. (Round discount factor(s) to 3 decimal places.) Answer is complete but not entirely correct. presen $ (874,316) value
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