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A project equipment cost is $120,000 and it will last 5 years. The equipment is depreciated over 4 (no depreciation in the fifth year) years
A project equipment cost is $120,000 and it will last 5 years. The equipment is depreciated over 4 (no depreciation in the fifth year) years with equal weight towards a $20,000 salvage value (straight line). Cash sales are $150,000 per year and costs of goods sold (COGS) are $90,000. The appropriate discount rate is 16% and the corporate tax rate is 21%. Calculate the project net present value and determine whether the project should be accepted or rejected.
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