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October 1, 2014

Homework Help: finance

Posted by j on Saturday, October 13, 2012 at 9:27pm.

You have been given the following information on a project:
It has a 3-year lifetime
The initial investment in the project will be $28 million, and the investment will be depreciated straight line, down to a salvage value of $6 million at the end of the fourth year.
The revenues are expected to be $21 million next year and to grow 2% a year after that for the remaining two (0) years.
The cost of goods sold, excluding depreciation, is expected to be 55% of revenues.
Estimate the pre-tax return on capital, by year and on average, for the project.

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