What is the project npv

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Reference no: EM133015700

Question - Hubery Home Inc is considering a new threeyear expansion project that requires an initial fixed asset investment of $3.9 million. The fixed asset falls into Class 10 for tax purposes(CCA rate of 30% per year) and at the end of the three years can be sold for a salvage value equal to UCC. The project is estimated to generate $2,650,000 in annual sales with costs of $840,000.

A) If the tax rate is 35% what is the OCF for each year of this project?

B) Suppose the retun on the project is 12%. What is the project's NPV?

Reference no: EM133015700

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