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    Capital budgeting

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    Create an Excel spreadsheet for a production plant with the following criteria:

    - The company will lease for 5 years at $1,500,000 per year.
    - It will cost the firm $4,000,000 in capital (straight-line depreciation, 5 year life) in year 0.
    - It will cost the firm an additional $150,000 per year after the new production plant is brought online for other expenses.
    - It will generate incremental revenue of $3,500,000 per year.

    Use a 40% tax rate, a 10% cost of capital, and a 12% reinvestment rate. Assume the company will use cash flow to finance the project.

    In a separate document, indicate how the project would fair under hurdle rate scenarios of 10%, 15%, and 20% (based on MIRR).

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    https://brainmass.com/business/capital-budgeting/capital-budgeting-351803

    Solution Summary

    The solution explains how to determine the cash flows for the project and the NPV

    $2.19

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