Considering expanding its wine-making operations

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Lakeside Grapes is considering expanding its wine-making operations. They would need new equipment that costs $350,000 that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project. The estimated salvage value is $62,000. The project requires $35,000 initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $187,500 a year. What is the net present value of this project if the relevant discount rate is 15 percent and the tax rate is 35 percent?

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Reference no: EM131935611

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