Considering expanding its wine-making operations

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Lakeside Winery is considering expanding its wine-making operations. The new equipment would cost $138,000, would be depreciated on a straight line basis over its 5-year life, and would have a zero value at the end of the 5th year. The estimated income generated from the new equipment is $86,000 a year. The estimated expenses and costs of the new project are $35,600. The project will require $3,000 of net working capital, which is recoverable at the end of the project. What is the net present value of this project at a discount rate of 12 percent and a tax rate of 34 percent? (OCF=$42,648; NPV=$14,439)

Reference no: EM13910966

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