Given the following information, answer questions 18 to 20 ALD Corp. is considering a project that requires
Question:
Given the following information, answer questions 18 to 20
ALD Corp. is considering a project that requires a $40,000 initial cost for a new machine that will be depreciated straight line to a salvage value of 0 on a 8-year schedule. The project will require a one-time increase in the level of net working capital of $10,000. The project will generate an additional $9,000 in revenues and $2,000 in operating expenses each year. The project will end at the end of year 2, at which time the machinery is expected to be sold for $30,000, and the working capital is expected to be 100% recovered. ALDs tax rate is 40%. In a discounted cash flow analysis of this project:
20) Assuming a discount rate of 6%, what would be NPV of this two-year project?
Group of answer choices
$ -2,806
$ -3,033
$ 1,582
$ 2,459
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