Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by...

 

Transcribed Image Text:

Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the accompanying data. If the cost of capital is 8.5%, what is the net present value (NPV) of this project? X Data Revenues Costs of Goods Sold Gross Profit Selling, General, and Admin Capital Cost Allowance EBIT Income Tax (35%) Incremental Earnings Capital Purchases Changes to NWC Year 0 -600,000 Year 1 800,000 -320,000 480,000 Year 2 800,000 Year 3 800,000 -320,000 -320,000 480,000 480,000 -105,000 -105,000 -105,000 -150,000 -225,000 -112,500 225,000 150,000 262,500 -78,750 -52,500 -91,875 146,250 97,500 170,625 -12,000 -12,000 -12,000 Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the accompanying data. If the cost of capital is 8.5%, what is the net present value (NPV) of this project? X Data Revenues Costs of Goods Sold Gross Profit Selling, General, and Admin Capital Cost Allowance EBIT Income Tax (35%) Incremental Earnings Capital Purchases Changes to NWC Year 0 -600,000 Year 1 800,000 -320,000 480,000 Year 2 800,000 Year 3 800,000 -320,000 -320,000 480,000 480,000 -105,000 -105,000 -105,000 -150,000 -225,000 -112,500 225,000 150,000 262,500 -78,750 -52,500 -91,875 146,250 97,500 170,625 -12,000 -12,000 -12,000

Answer rating: 100% (QA)

heres the stepbystep calculation of the net present value NPV of the project 1 Calculate Earnings Be... View the full answer