Question
ABC Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be
ABC Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Risk-adjusted WACC 100%
Net investment cost (depreciable basis) $47.297
Straight line depreciation rate 33.33339%
Sales revenues, each year $78,817
Annual operating costs (excl. depreciation) $14,846
Tax rate: 210
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