ABC Industries is evaluating the decision to purchase equipment. The machinery required for a three-year project costs $40,000, belongs in a 15% CCA class, and will require a net working capital investment of $5,000 up-front. The working is expected to be recovered at the end of the project. The project generates pre-tax operating income of $21,000. The fixed assets will be sold for $2,000 (net of tax) at the end of the project. If the firm has a tax rate of 34% and a required return of 10%, what is the project NPV and should they consider this project?

Answer rating: 100% (QA)

Cal culation Initial Investment 40 000 5 000 35 000 Tax Shiel... View the full answer