1Q

Initial Investment: $15,000

Salvage Value: $4,000

Yearly Revenue: $6,000

Yearly Expenses: $2,000

Annual Depreciation: $3,000

Project Life: 5 years

Cost of Capital: 8.8%

Tax rate: 25%

Calculate the NPV of the project.

2Q

Onshore Drilling is considering the purchase of a new drill. OnShore is currently financed 50% with equity and 50% with debt and the new drill investment has similar risks to OnShore's prior investment projects. What cost of capital measure should OnShore use to calculate the NPV of the drill purchase?

Group of answer choices

IRR

CAPM re

NCF

WACC