A project has an initial requirement of $95,316 for equipment. The equipment will be depreciated to a zero book value over the 6-year life of the project. The investment in net working capital will be $4,025. All of the net working capital will be recouped at the end of the 6 years. The equipment will have an estimated salvage value of $21,686. The annual operating cash flow is $48,769. The cost of capital is 14 percent. What is the project’s net present value if the tax rate is 26 percent?
A project has an initial requirement of $95,316 for equipment. The equipment will be depreciated to a zero book value over the 6-year life of the project. The investment in net working capital will be $4,025. All of the net working capital will be recouped at the end of the 6 years. The equipment will have an estimated salvage value of $21,686. The annual operating cash flow is $48,769. The cost of capital is 14 percent. What is the project’s net present value if the tax rate is 26 percent?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A project has an initial requirement of $95,316 for equipment. The equipment will be
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