What is the projects net present value assuming a discount

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A new project is expected to have an 10-year economic life. The project will have an initial cost of $125000. Installation and shipping charges for the equipment are estimated at $10,000. The equipment will be depreciated using straight line depreciation. An initial working capital investment of $25,000 is required to undertake the project. The revenues from the project in year 1 are expected to be $50,000. These revenues are expected to increaser at a rate of 8% each year. Operating costs including depreciation are $18,000 and are expected to increase at a rate of 6% each year. The firm's marginal tax rate is 40 percent. The expected salvage value at the end of year 10 is $0

Problem a. What is the projects Net Present value assuming a discount rate of 12%?

Problem b. What is the projects IRR?

Reference no: EM132791561

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