Project Y Is a Two- Year Project That Involves the Purchase

question 25

Multiple Choice

Project Y is a two- year project that involves the purchase of new machinery for $100 million,that is expected to yield EBDIT of $59 million in year 1 and $80 million in year two.For tax purposes the machine can be depreciated on a straight- line basis.The current corporate tax rate is 33%.What is the project's ARR?

• A)39%
• B)19%
• C)46%
• D)26%

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