Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $685,000 that would be depreciated on a straight-line basis to zero over the 4-year life of the project. The equipment will have a market value of $186,000 at the end of the project. The project requires $56,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $210,600 a year.
What is the net present value of this project if the relevant discount rate is 14 percent and the tax rate is 34 percent?

Answer rating: 100% (QA)

B257 A Year B Cash flow 0 741000 1 210600 2 21060... View the full answer