What is the net present value of the project

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A firm is considering a capital budgeting replacement project with an initial outlay of $250,000, which includes both an after-tax salvage from the old asset of $20,000 and an additional working capital investment of $10,000. The expected annual incremental cash flow after-tax is $20,000. The project has 14-year life and is expected to generate a terminal value at the end of the project's life of $25,000. The cost of capital of the project is 12 percent, and the firm's marginal tax rate is 40 percent. What is the net present value of the project?

Reference no: EM132558437

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