Question: Java Cafes tax rate is 45 percent and the appropriate discount rate is 8 percent. It is considering a project. Each asset class consists only

Java Cafe’s tax rate is 45 percent and the appropriate discount rate is 8 percent. It is considering a project. Each asset class consists only of the project asset and will be terminated at the end of the project. Java Cafe is not capital constrained. The initial investment is $40,000; annual pre-tax operating cash flow is $15,000; salvage value is $30,000; the CCA rate is 10 percent; and the length of the project is three years. Should Java Cafe take this project?

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