Find out the market risk premium

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Your company is considering a new project.The required equipment has a3-year tax life,after which it will have zero salvage value.The equipment will be depreciated by the straight-line method over3years.The cost of this equipment is$60,000.The project will increase the firm's revenue by$10,000and decrease the operating costs by$7,500per year over the project's3-year life.The firm falls in35%tax bracket.The company is financed exclusively by equity,the beta of this company1.4,the risk free rate is3% and the market risk premium is8%.

Reference no: EM131166062

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