Calculate the npv of the project using fte approach

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You are evaluating a project that saves $21,000 per year for the next 3 years. The project requires a machine that costs $45,000. The machine has a CCA rate of 35% and salvage value of $5,400. The asset class remains open and the UCC is positive. You take out a 4% loan of $18,000 to finance the machine and pay off the loan when the project ends. Your normal cost of borrowing is 6% and the tax rate is 20%.

-If the cost of unlevered equity is 13%, calculate the NPV of the project using APV approach.

-If the cost of equity is 14%, calculate the NPV of the project using FTE approach.

Reference no: EM132611776

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