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STM Inc. is considering a 4-year project with an initial cost of $763,289. The project will not directly produce sales but will reduce operating costs
STM Inc. is considering a 4-year project with an initial cost of $763,289. The project will not directly produce sales but will reduce operating costs by $298,125 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project, the equipment will be sold for an estimated $40,664. The tax rate is 35%. The project will require $27,893 in extra inventory for spare parts and accessories. STM requires a 10% rate of return. What is the NPV of the project?
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