A project requires an initial investment of $350,000 (i.e., you buy a machine for 350,000). The project will also require NWC of $7,500. Revenues, costs, depreciation, and taxes are shown below. The corporate tax rate is 21%. The company's tax situation is such that it can make use of all applicable tax shields. The working capital will be recovered at the end of the project. Assume that the asset can be sold for $85,000 at the end of year 2. The opportunity cost of capital is 12%. Should the company undertake the project? Dollar figures are in thousands (000s) Year 1 Year 2 Revenue 358.00 392.00 Costs 180.00 202.00 Depreciation (MACRS) 116.67 157.50 Income Before Taxes 61.33 32.50 Taxes (21%) 12.88 6.83 PAT 48.45 25.68

A project requires an initial investment of $350,000 (i.e., you buy a machine for 350,000 ). The project will also require NWC of $7,500. Revenues, costs, depreciation, and taxes are shown below. The corporate tax rate is 21%. The company's tax situation is such that it can make use of all applicable tax shields. The working capital will be recovered at the end of the project. Assume that the asset can be sold for $85,000 at the end of year 2 . The opportunity cost of capital is 12%. Should the company undertake the project