An IT company invested in equipment that costs $8 million. This equipment generates revenue of $2.1 million annually while incuring a yearly maintenance cost of $650 000. The WACC during the project is 8% and life time of the equipment is 10 years. The equipment has a salvage value of $200000 but is sold at a market value of $700000. Assume a tax rate of 40%, with no interest payment deductions. 

Caution: Depreciation is not a cashflow item and is only used to calculate EBIT. 

Calculate the NPV and IRR of the project.

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Answer rating: 100% (QA)

SOLUTION To calculate the NPV and IRR of the project we need to determine the cash flows associated ... View the full answer