Calculate the npv of the project

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CBC Inc. invests in a project that requires a machine of $39,000 and will generate annual taxable cash flow of $7,200 for 10 years. The machine has a CCA rate of 25% and salvage value of $900 at year 10. The asset class remains open with positive UCC. The unlevered cost of equity is 9%, the cost of debt is 5% and the tax rate is 30%.

-Assume the project will be financed at its target debt-to-equity ratio of 0.4, calculate the NPV of this project using the WACC method.

-Assume CBC borrows $8,000 to finance the project and repay the loan when the project ends, calculate the NPV of the project using the APV method.

-With the same assumptions as part B, calculate the NPV of the project using the FTE method.

Reference no: EM133068911

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