Question: A project to replace Dr. Robert Dobacks boat requires an initial investment of $250,000 and is expected to produce operating earnings (before depreciation and tax

A project to replace Dr. Robert Dobacks boat requires an initial investment of $250,000 and is expected to produce operating earnings (before depreciation and tax (EBITDA)) of $60,000 per year for 5 years

Prestige Worldwide pays corporate taxes at a rate of 22% and can depreciate the initial investment for tax purposes at 25% in each of the first four years

Their public debt trades at 4% and they estimate their cost of equity at 14%, the debt/equity composition is 30/70

Calculate WACC, the project NPV and IRR

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