Question: Dysound Inc. is considering a new project. The project will require $225,000 for new fixed assets, $75,000 for additional inventory and accounts receivable (working capital).

Dysound Inc. is considering a new project. The project will require $225,000 for new fixed assets, $75,000 for additional inventory and accounts receivable (working capital). The project has a 6-year life. The fixed assets belong to a 45% CCA class. At the end of the project, there is no salvage cost. The net working capital returns to its original level at the end of the project. The project is expected to generate annual sales of $500,000 and costs of $390,000. The tax rate is 35% and the required rate of return is 15%.

A.Find the PV of CCA Tax Shield

B.Find the NPV for the project.

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