14

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV?

Project Data

Risk-adjusted WACC	10.0%
Net investment cost (depreciable basis)	$65,000
Straight-line deprec. rate	33.3333%
Sales revenues, each year	$65,500
Operating costs (excl. deprec.), each year	$25,000
Tax rate	35.0%

Select one:

a. $16,569

b. $15,740

c. $17,441

d. $18,359

e. $19,325