Temple corp is considering a new project whose data are

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Reference no: EM13380996

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. New working capital of $6,000 is required for inventory. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV and IRR?

WACC	10%
Net investment cost (depreciable basis)	$65,000
Straight-line depreciation	3 years
Sales revenues, each year	$65,500
Operating costs (excl. deprec.) each year	$25,000
Working Capital for inventory	$6,000
Tax Rate	35%

a. NPV = $17,832 ; IRR = 23.89%

Reference no: EM13380996

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