Calculate the npv of the project at the start of the project

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The following data relate to an investment proposal. The project's estimated life is 3 years, its cost is $360,000 and the operating net cash flows is $220,000 per annum (real and before tax) and the salvage value is $25,000 (real and before tax) on which the full amount is subject to tax. The annual straight-line depreciation is $120,000 per annum (nominal and before tax), the opportunity cost of capital is 8.15% per annum (nominal and after tax) and the interest expense is $30,000 per annum (nominal and before tax). The anticipated inflation rate is 3% per annum and the company's tax rate is 30%. Assume that the turnover for the company is $50 million. All calculations are to be in a nominal, after-tax basis.

Calculate the NPV of the project at the start of the project. Show all calculations.

Reference no: EM132698139

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