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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Roller and Decker Corp has established a joint venture with Malaysia Road Construction Company to build a toll road in Malaysia. The initial investment in paving equipment is $20 million. Straight-line depreciation will be used, and the equipment has an economic life of five years with no salvage value. The annual construction costs are estimated to be $10 million. The project will be finished in two years. Net toll revenue collected from the usage of the road is projected to be $6 million per annum for 20 years starting from the end of the first year of usage. The local preferential corporate tax rate for joint ventures is 25 percent. There are no other taxes. The required rate of return for the project under allequity financing is 12 percent. The prevailing market interest rate is 9 percent a year. To encourage foreign capital participation in the infrastructure sector, the Malaysian government will subsidize the project with $10 million of a 15-year, long-term loan, at an interest rate of 5 percent a year. What is the NPV of this project?
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