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Assume that you are looking at an investment opportunity that offers an annual operating cash flow of $40,000 per year for 4 years. The initial
Assume that you are looking at an investment opportunity that offers an annual operating cash flow of $40,000 per year for 4 years. The initial investment to purchase the necessary equipment is $200,000. You assume that you can sell the equipment at the end of 4 years for $70,000. Also, initially there is a need for an investment in net working capital of $15,000, but this increases to $35,000 in year 1. If your required rate of return is 5% and the tax rate is 35%, what is the NPV? a.Yes, because the NPV is $3,230.00 b., because the NPV is $30,000.00 c.No, because the NPV is -$5,825.84 d.No, because the NPV is -$25,982.05 e.No, because the NPV is -$23,388.48
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