Question: A company is planning a four-year project, with an initial cost of $1.67 million. This investment cost is amortized to zero over four years on
A company is planning a four-year project, with an initial cost of $1.67 million. This investment cost is amortized to zero over four years on a straight-line basis. However, the asset could be disposed of for $435,000 in four years. The project requires $198,000 in working capital initially and is fully recoverable after the project is completed. The project generates $1,850,000 in sales and $1,038,000 in costs each year. If the tax rate is 21% and the required return rate is 16.4%, what is NPV?
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