Depreciated by the straight-line method

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Reference no: EM131070646

W. Rooney Company. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. There is no need for a change in new working capital. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV and IRR?

Risk-adjusted WACC 10%

Additional Net Working Capital needed $3,000

Net investment cost (depreciable basis) $65,000

Sales revenues, each year $65,500

Operating costs (excl. deprec.), each year $25,000

Tax rate 35%

Reference no: EM131070646

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