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Rucci Inc. 7 years

Rucci Inc. is considering a project that would require an initial investment of $462,000 and would have a useful life of 7 years. The annual cash receipts would be $300,000 and the annual cash expenses would be $120,000. The salvage value of the assets used in the project would be $69,000. The company's tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 5 years. The company uses a discount rate of 18%.

Questions:

What is the annual NET Cash Receipts?
What is the annual Depreciation Deduction?
What is the Net Present Value for this project?

Solution Preview

Please find my response in the attached file.

Rucci Inc. is considering a project that would require an initial investment of $462,000 and would have a useful life of 7 years. The annual cash receipts would be $300,000 and the annual cash expenses would be $120,000. The salvage value of the assets used in the project would be $69,000. The company's tax rate is 30%. For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 5 years. The company uses a discount rate of 18%.

Questions: ...

Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment in text file.

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