Question

Draper Corporation is considering two investment projects, each of which would require a $60,000 initial investment. Cost and cash flow data concerning the two projects are given below:
The inventory scanning equipment would have a salvage value of $6,000 in 10 years. The equipment would be depreciated over 10 years. At the end of 10 years, the investment in working capital would be released for use elsewhere. The company requires an after-tax return of 12% on all investments. The tax rate is 30%.
Required:
Compute the net present value of each investment project.


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  • CreatedJuly 08, 2015
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