Project would require initial investment in equipment

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Reference no: EM132033184

What is the NPV of project A. The project would require an initial investment in equipment of 73,000 dollars and would last for either 3 years or 4 years (the date when the project ends will not be known until it happens and that will be when the equipment stops working in either 3 years from today or 4 years from today). Annual operating cash flows of 21,900 dollars per year are expected each year until the project ends in either 3 years or 4 years. In 1 year, the project is expected to have an after-tax terminal value of 40,447 dollars. The cost of capital for this project is 10.05 percent.

Reference no: EM132033184

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