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Compute the net present value for the project

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Question - BANK OF ATLANTA is planning to open a new branch. The building will cost $22 5,000 and will be depreciated (on a straight-line basis) over a 20~year life to a $0 estimated salvage value. Equipment for the building will cost an additional $125,000. This equipment has a 20-year life and will be depreciated on a straight-line basis to a $0 estimated salvage value. The branch office is expected to generate additional before tax net income of $40,000 per year. The tax rate is 40% and the cost of capital is 10%. Compute the net present value for the project.

Reference no: EM132968882

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