Considering expanding its winemaking operations

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Reference no: EM132016758

Lakeside Winery is considering expanding its winemaking operations. The expansion will require new equipment costing $665,000 that would be depreciated on a straight-line basis to zero over the 6-year life of the project. The equipment will have a market value of $176,000 at the end of the project. The project requires $46,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $151,600 a year. What is the net present value of this project if the relevant discount rate is 12 percent and the tax rate is 40 percent?

Reference no: EM132016758

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