Question
PECO is considering the purchase of new equipment for a 3-year project. The equipment costs $300,000 and an additional $65,000 is needed to install it.
PECO is considering the purchase of new equipment for a 3-year project. The equipment costs $300,000 and an additional $65,000 is needed to install it. The equipment will be depreciated using a 3-year MARCS schedule and will be sold for $165,000 at the end of three years. The project will generate additional annual revenues of $250,000 and it will have annual expenses of $65,000. The project will require an investment of $80,000 in net working capital. PEDCO is in the 30 percent tax bracket and requires 18 percent return on projects. What is the project NPV?
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