Intro

Consider a project with a $4-$year life. The initial cost to set up

the project is $$100,000.$ This amount is to be linearly

depreciated to zero over the life of the project and there is no

salvage value. The required return is $11\%$ and the tax rate is

$34\%.$

You've collected the following estimates:

Part $1$

What is the annual incremental cash flow in the base case?

Part $2$

What is the NPV in the base case?

Part $3$

What is the NPV in the pessimistic case?

Part $4$

Attempt $\frac{1}{3}$ for $10$ pts$.$

What is the NPV in the optimistic case?