Question: XYZ is considering a project that would last for 3 years and have a cost of capital of 19.90 percent. The relevant level of net
XYZ is considering a project that would last for 3 years and have a cost of capital of 19.90 percent. The relevant level of net working capital for the project is expected to be $1,648.60 immediately (at year 0); $4,990.00 in 1 year; $14,300.00 in 2 years; and $0.00 in 3 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, 2, and 3 are presented in the following table. The tax rate is 45.00 percent. What is the net present value of this project?. Year 0 Year 1 Year 2 Year 3 Revenue $ 0.00 $13,700.00 $13,900.00 $12,500.00 Costs $ 0.00 $3,970.00 $3,990.00 $3,500.00 Depreciation $ 0.00 $1,850.00 $2,100.00 $2,300.00 Cash flows from capital spending $-5,360.00 $ 480.00 $ 150.00 $4,320.00
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