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Should hollings proceed with the new project

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Reference no: EM132718330

Hollings Company, a furniture manufacturer, is considering investing in some new production machinery. The details of this investment are:

Amount of investment - $ 313,000
Annual cash flow revenue - $145,000
Annual cash flow expenses - $60,000
Life of the project(in years) - 13
Scrap value of equipment at the end of the project - $18,000
Hollings company's corporate tax rate - 32%
Hollings company's weighted average cost of capital - 10%
CCA rate on the new equipment - 35%

Problem i) Calculate the net present value of this project

Problem ii) Calculate the profitability index

Problem iii) Should Hollings proceed with the new project?

Reference no: EM132718330

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