Question
10. (TCO H) Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a three-year tax
10. (TCO H) Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a three-year tax life, would be depreciated by the straight-line method over its three-year life, and would have a zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the projects three-year life. What is the projects NPV? Risk-adjusted WACC 10.00% Net investment cost (depreciable basis) $65,000 Straight-line deprec. rate 33.33% Sales revenues, each year $65,500 Operating costs (excl. deprec.), each year $25,000 Tax rate 35.00%
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