### Project Evaluation for Temple Corp. Temple Corp. is considering a new project, and the relevant financial data for this evaluation are provided below. This information will help determine the project's Net Present Value (NPV).- **Risk-Adjusted WACC (Weighted Average Cost of Capital):** 10.0%- **Equipment Cost:** $63,800- **Sales Revenues (Each Year):** $51,400- **Annual Operating Costs:** $21,500- **Tax Rate:** 25.0%- **Project Life:** 3 years### Key Points:1. **Depreciation:** - Under the new tax law, the equipment used in the project qualifies for 100% bonus depreciation, meaning it will be fully depreciated in the first year (at t = 0). - The equipment will have a **zero salvage value** at the end of the project's life.2. **Working Capital:** - There will be **no change in net operating working capital (NOWC) required** for this project.3. **Revenue and Costs:** - Revenues and operating costs are expected to remain constant over the 3-year duration of the project.### Question:What is the project's NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number.### NPV Calculation Options:a. $7,918 b. $12,268 c. $13,494 d. $5,189 e. $10,557 Please refer to the given financial data and use the appropriate financial formulas to calculate the Net Present Value (NPV) of the project.

Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Answered: Temple Corp. is considering a new…

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

Problem 1PS

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In your first job with TBL Inc. your task is to consider a new project whose data are shown below. What is the project's Year 1 cash flow? The annual operating cash flows of the project can be calculated as follows: OCF = {[Sales - Operating Costs]*(1-Tax Rate)} + (Depreciation * Tax Rate) Sales revenues $225,250 Depreciation $78,847 Other operating costs $92,000 Tax rate 18%
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Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 10% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 Project X2 Initial investment $ (112,000) $ (170,000) Net cash flows in: Year 1 41,000 84,000 Year 2 51,500 74,000 Year 3 76,500 64,000 a. Compute each project’s net present value.b. Compute each project’s profitability index. If the company can choose only one project, which should it choose on the basis of profitability index?
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