Require an initial investment in equipment

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Reference no: EM131548969

What is the NPV of project A? The project would require an initial investment in equipment of 68,000 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 21,760 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 44,827 dollars. The cost of capital for this project is 6.52 percent.

Reference no: EM131548969

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