Question: Temple Corp. is considering a new project whose data are shown below. The equipment would be used for three years with straight-line depreciation, and would
Temple Corp. is considering a new project whose data are shown below. The equipment would be used for three years with straight-line depreciation, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? (Hint: You need to first find CFO, CFI, CF2, and CF3. CF1-CF3 are the same number.) Keep the - sign if it's a negative NPV number. Round to the whole dollar Risk-adjusted WACC 10.0% Net investment cost (depreciable basis) $65,000 Straight-line depr. rate 33.3333% Sales revenues, each year $67,500 Annual operating costs (excl. depr.) $25,000 Tax rate 35.0%
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