Question: Question 26) Blue Eagle Packaging is considering a project that would last for 2 years and have a cost of capital of 8.78 percent. The
Question 26)
Blue Eagle Packaging is considering a project that would last for 2 years and have a cost of capital of 8.78 percent. The relevant level of net working capital for the project is expected to be 22,000 dollars immediately (at year 0); 6,000 dollars in 1 year; and 0 dollars in 2 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, and 2 are presented in the following table (in dollars). The tax rate is 50 percent. What is the net present value of this project?
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| Year 0 | Year 1 | Year 2 |
| Revenue | $0 | 181,000 | 181,000 |
| Costs | $0 | 64,000 | 64,000 |
| Depreciation | $0 | 33,000 | 33,000 |
| Cash flows from capital spending | -68,000 | 0 | 20,000 |
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