Question
GreenBike considering expanding its bike share factory expansion. The expansion will require new equipment costing $800,000 that would be depreciated on a straight-line basis to
GreenBike considering expanding its bike share factory expansion. The expansion will require new equipment costing $800,000 that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project. The estimated salvage value of the equipment is $150,000. The project requires $60,000 initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $250,000 a year. What is the net present value of this project if the relevant discount rate is 16% and the tax rate is 28%?
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