The Johnson Drum Company is planning to build a new factory.The purchase of the land, building the plant, and installation of equipment will take place over a two year period.The following are planned cash outflows:
$$\begin{array} { l l }
\frac { \text { Year } } { 0 } & \frac { \text { Cash Outflow } } { \$ 3,500,000 } \
1 & \$ 4,750,000 \
2 & \$ 6,100,000
\end{array}$$
Johnson Drum's cost of capital is 14%, and its marginal tax rate is 35%.What is the NINV measured in present value terms today?

Question

The Johnson Drum Company is planning to build a new factory.The purchase of the land, building the plant, and installation of equipment will take place over a two year period.The following are planned cash outflows:
$$\begin{array} { l l } 
\frac { \text { Year } } { 0 } & \frac { \text { Cash Outflow } } { \$ 3,500,000 } \
1 & \$ 4,750,000 \
2 & \$ 6,100,000
\end{array}$$
Johnson Drum's cost of capital is 14%, and its marginal tax rate is 35%.What is the NINV measured in present value terms today?

Quizplus · Accepted Answer

The Answer of The Johnson Drum Company is planning to build a new factory.The purchase of the land, building the plant, and installation of equipment will take place over a two year period.The following are planned cash outflows:
$$\begin{array} { l l } 
\frac { \text { Year } } { 0 } & \frac { \text { Cash Outflow } } { \$ 3,500,000 } \
1 & \$ 4,750,000 \
2 & \$ 6,100,000
\end{array}$$
Johnson Drum's cost of capital is 14%, and its marginal tax rate is 35%.What is the NINV measured in present value terms today?

The Johnson Drum Company Is Planning to Build a New