Management is considering purchasing an asset for 42000

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Reference no: EM13581334

Management is considering purchasing an asset for $42,000 that would have a useful life of 6 years and no salvage value. For tax purposes, the entire original cost of the asset would be depreciated over 6 years using the straight-line method. The asset would generate annual net cash inflows of $33,000 throughout its useful life. The project would require additional working capital of $3,000, which would be released at the end of the project. The company's tax rate is 40% and its discount rate is 11%.
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

What is the net present value of the asset?

Reference no: EM13581334

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