Involve buying new piece of equipment

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Reference no: EM132033175

Litchfield Design is evaluating a 3-year project that would involve buying a new piece of equipment for 450,000 dollars today. The equipment would be depreciated straight-line to 50,000 dollars over 2 years. In 3 years, the equipment would be sold for an after-tax cash flow of 60,000 dollars. In each of the 3 years of the project, relevant revenues are expected to be 272,000 dollars and relevant costs are expected to be 97,000 dollars. The tax rate is 50 percent and the cost of capital for the project is 10.66 percent. What is the NPV of the project?

Reference no: EM132033175

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