Question: Foley Systems is considering a new investment whose data are shown below. The equipment would have a zero salvage value, and would require $15,000 additional

Foley Systems is considering a new investment whose data are shown below. The equipment would have a zero salvage value, and would require $15,000 additional net operating working capital that would be recovered at the end of the project's life. Operating cash flows are expected to be constant over the project's life. What is the project's NPV?

(Hint: Cash flows from operations are constant in Years 1 to 3.)

W ACC 10.0%

Net investment in fixed assets (basis) $75,000

Net operating working capital $15,000

Operating cash flow $41,250

Tax rate 35%

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