FINANCE $335$

HOMEWORK #$7$

Initial Investment

Change in $$10,000$

Equipment $$80,000$

Shipping $$10,000$

NOWC

Modifications $$10,000$

MACRS $3$ years

Salvage

$$20,000$

Tax Rate $25\%$

$00,000$

$4$ year

Project

Cost of Capital $10\%$

Revenues $$100,000$ per year

Operating Cost $$40,000$ per year

Calculate the cash flows for the above project.

Calculate the IRR, NPV$,$ Payback Period and Profitability Index $.$

Would you accept this project?