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What is the net present value of this project

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Reference no: EM131498811

X Corp. is considering a new project which will have costs, revenues, etc. as shown by the table below. To carry out the project, X Corp. has to buy (at year 0) new equipment worth $600,000, which will be depreciated by straight-line over three years (assume there is no salvage value). If the Net Working Capital at year 0 is $0, the cost of capital is 8.0%, and the average tax rate is 25%, the marginal tax rate is 35%, what is the net present value (NPV) of this project?

                                          Year 1                     Year 2                                Year 3

                      Revenues   700.000                   700,000                            700,000

                       COGS         300.000                   300,000                            300,000

                      Expenses    100,000                   100,000                            100,000

               Net Working Cap.       0                       30,000                                  0

Reference no: EM131498811

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