Straight-line depreciation to a zero book value over life

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Reference no: EM131055062

Lewis Industries looking at a project that will require a $100,000 investment in fixed assets and another $15,000 in net working capital, which will be recovered at the end of the project. The project is expected to produce sales of $110,000 with associated costs of $60,000 over its 4-year life. The company uses straight-line depreciation to a zero book value over the life of the project (there is expected to be no salvage value for the equipment). The tax rate is 40%. Lewis uses a 12% discount rate for this type of investment. What is the net present value and internal rate of return for this project? Use Excel to solve.

Reference no: EM131055062

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