Question
Please Work out Problem ! Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a
Please Work out Problem !
Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life. Under the new tax law, the equipment used in the project is eligible for 100% bonus depreciation, so it will be fully depreciated at t = 0. The equipment would have a zero salvage value at the end of the projects life. No change in net operating working capital (NOWC) would be required. Revenues and operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number.
Risk-adjusted WACC 10.0%
Equipment cost $60,200
Sales revenues, each year $51,100
Annual operating costs $22,500
Tax rate 25.0%
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