Your company is considering a project which will require the purchase of $775,000 in new equipment.The company
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Question:
Your company is considering a project which will require the purchase of $775,000 in new equipment.The company expects to sell the equipment at the end of the project for 25% of its original cost, but some assets will remain in the CCA class.Annual sales from this project are estimated at $280,000.Initial net working capital equal to 35.00% of sales will be required.All of the net working capital will be recovered at the end of the project. The firm requires a 11.50% return on similar investments.The tax rate is 35%, and the project life is 5 years.There are no other operating expenses.Assume the present value of the CCA tax shield is $130,000.What is the project's NPV?
options:
a)86,041
b)88,306
c)90,570
d)92,834
e)95,098
Posted Date: