Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the variable cost under the best-case scenario?
A) $45,600
B) $50,400
C) $53,200
D) $56,000
E) $58,800

Question

Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:  Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the variable cost under the best-case scenario?
A) $45,600 
B) $50,400 
C) $53,200 
D) $56,000 
E) $58,800

Quizplus · Accepted Answer

The Answer of Magellen Industries is analyzing a new project. The data they have gathered to date is as follows:  Initial requirement for equipment: $120,000
Depreciation: Straight-line to zero over the four-year life of the project with no salvage value.
Required rate of return: 15%
Marginal tax rate: 35%
What is the variable cost under the best-case scenario?
A) $45,600 
B) $50,400 
C) $53,200 
D) $56,000 
E) $58,800

Magellen Industries Is Analyzing a New Project