Compute the project npv

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Reference no: EM133120388

A new product is being considered for market. An outlay of $16M is required for equipment and $4M for additional net working capital. Management expects the project to have a 4-year useful life and plans to depreciate the equipment according to 3-year MACRS. The expected salvage price of the equipment in four years is S=$3M. Annual revenues are expected to be $11M and annual costs are expected to be $4M. If the project's cost of capital is 18% and the firm's marginal tax rate is 40%, compute the project's NPV.

Reference no: EM133120388

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