Question
Silver Sun Aviation is considering a project that would last for 2 years and have a cost of capital of 17.06 percent. The relevant level
Silver Sun Aviation is considering a project that would last for 2 years and have a cost of capital of 17.06 percent. The relevant level of net working capital for the project is expected to be 16,000 dollars immediately (at year 0); 12,000 dollars in 1 year; and 0 dollars in 2 years. Relevant expected revenue, costs, depreciation, and cash flows from capital spending in years 0, 1, and 2 are presented in the following table (in dollars). The tax rate is 50 percent. What is the net present value of this project?
Year 0 | Year 1 | Year 2 | |
Revenue | $0 | 186,000 | 186,000 |
Costs | $0 | 62,000 | 62,000 |
Depreciation | $0 | 49,000 | 49,000 |
Cash flows from capital spending | -100,000 | 0 | 16,000 |
there's a table with all the values above
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