Question
Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be
Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Risk-adjusted WACC 10.0% Net investment cost (depreciable basis) $65,000 Straight-line deprec. rate 33.3333% Sales revenues, each year $65,500 Annual Operating costs (excl. deprec.) $25,000 Tax rate 35.0% ( look at the right data )
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