Question
Temple Corp. is considering a new project whose data are shown below. The equipment would be used for three years with straight-line depreciation, and would
Temple Corp. is considering a new project whose data are shown below. The equipment would be used for three years with straight-line depreciation, 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? (Hint: You need to first find CF0, CF1, CF2, and CF3. CF1-CF3 are the same number.)
Keep the - sign if it's a negative NPV number. Round to the whole dollar.
Risk-adjusted WACC | 10.0% |
Net investment cost (depreciable basis) | $65,000 |
Straight-line depr. rate | 33.3333% |
Sales revenues, each year | $67,500 |
Annual operating costs (excl. depr.) | $25,000 |
Tax rate | 35.0% |
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