What is the project npv

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Stanley Inc. is considering a new investment whose data are shown below. The required equipment has a 3-year tax life and would be fully depreciated by the straight-line method over the 3 years, but it would have a positive salvage value at the end of Year 3, when the project would be closed down. Also, some new net operating working capital would be required, but it would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV?

WACC10%

Net equipment cost (depreciable basis) $90,000

Required new NOWC $20,000

Straight line depreciation rate 33.33%

Sales revenues $110,000

Operating costs excluding depreciation $45,000

Expected pretax salvage value $5,000

Tax rate 40%

a. $34,109.69

b. $35,222.36

c. $36,888.50

d. $38,000.00

e. $40,225.15

Reference no: EM132053763

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