Expected to be constant over the project three-year life

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Reference no: EM132040413

Yummy Foods is considering a new salsa product whose data are shown below. The equipment that would be used has a 3-year tax life and would be depreciated by the straight-line method over the project’s 3-year life. Revenues and other operating costs are expected to be constant over the project’s 3-year life. What is the NPV? (Please be sure to show your calculation)

Hurdle Rate 10%

Net initial investment $60,000

Initial increase in NOWC $10,000

Salvage value $10,000

Sales Revenues $70,000

Operating costs excluding depreciation $30,000

Tax rate 40%

Reference no: EM132040413

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