Question: Firm A is considering a project which will initially require $12,000 for new equipment. The equipment will be depreciated straight line to a zero book

Firm A is considering a project which will initially require $12,000 for new equipment. The equipment will be depreciated straight line to a zero book value over the three year life of project In addition, the project will require an investment of $30,000 in net working capital which will be recovered at the end of the project Annual sales are $45,000 with cost of $32,400.

The tax rate is 34%

What is the net present value of this project if the required return is 14%?

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