A project has an initial requirement of $195,422 for new
equipment and $14,626 for net working capital. The installation
costs to get the new equipment in working condition are 2,873. The
fixed assets will be depreciated to a zero book value over the
5-year life of the project and have an estimated salvage value of
$115,708. All of the net working capital will be recouped at the
end of the project. The annual operating cash flow is $76,206 and
the cost of capital is 13% What is the project's NPV if the tax
rate is 34%?
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