Compute the project npv assuming jerome wacc

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Q. The Jerome Inc. western regional branch has been looking to install a new distribution center. The analysts have run the numbers on the distribution center costs and annual inflow from the investment. The project will cost $5 million at the beginning of the first year. The project will generate $1 million in earnings before interest and taxes at the end of each year. Jerome is in the 35% tax bracket and annual depreciation equates to $500,000 per year. The distribution centre's end of the fifth year's salvage equals its book value or $2,500,000. Compute the project's NPV, assuming Jerome's WACC equals 12%.

Reference no: EM1398753

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