XYZ Inc. considers an investment project that requires $250,000 in new equipment and requires a $30,000...

 

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XYZ Inc. considers an investment project that requires $250,000 in new equipment and requires a $30,000 investment in NWC that will be returned at the end of the project. All investments are made on January 1 of the first year. The project will lead to an increase in operating pre-tax net revenue of $100,000 per year for 3 years (end of each year). At the end of the project, the equipment will be sold for a salvage value of $72,000. The equipment belongs to the a CCA class with d=40%, the corporate income tax rate is 30% and the cost of capital is 12% Problem 17: Find after-tax total cash flow for the second year. Problem 18: Find NPV of the project. XYZ Inc. considers an investment project that requires $250,000 in new equipment and requires a $30,000 investment in NWC that will be returned at the end of the project. All investments are made on January 1 of the first year. The project will lead to an increase in operating pre-tax net revenue of $100,000 per year for 3 years (end of each year). At the end of the project, the equipment will be sold for a salvage value of $72,000. The equipment belongs to the a CCA class with d=40%, the corporate income tax rate is 30% and the cost of capital is 12% Problem 17: Find after-tax total cash flow for the second year. Problem 18: Find NPV of the project.

Answer rating: 100% (QA)

Note Negative sign indicates cash outflow Here our primary aim to find NPV NPV is equal to discounte... View the full answer