How much is additional cash revenue during life of asset


G Mart, Inc., is considering the acquisition of equipment to expand its sales. The initial cost of the equipment is $100,000. However, the production manager has estimated the expansion program will increase cash operating costs by $20,000. Assume straight line depreciation to a zero salvage value, a tax rate of 40%, and a cost of capital of 10%. How much will the additional cash revenue during the 10 year life of the asset have to be to cause the IRR of the project to be equal to k?

Solution Preview :

Prepared by a verified Expert
Finance Basics: How much is additional cash revenue during life of asset
Reference No:- TGS0552603

Now Priced at $20 (50% Discount)

Recommended (91%)

Rated (4.3/5)