Question
I am considering expanding my winemaking operations. The expansion will require new equipment costing $651,000 that would be depreciated on a straight-line basis to zero
I am considering expanding my winemaking operations. The expansion will require new equipment costing $651,000 that would be depreciated on a straight-line basis to zero over the 5-year life of the project. The equipment will have a market value of $169,000 at the end of the project. The project requires $39,000 initially for net working capital, which will be recovered at the end of the project. The operating cash flow will be $165,300 a year. What is the net present value of this project if the relevant discount rate is 13 percent and the tax rate is 35 percent?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started