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The following relates to a potential capital investment project' Initial investment in working capital: $25 000 Initial investment in equipment: $160,000 Estimated annual sales :
The following relates to a potential capital investment project' Initial investment in working capital: $25 000 Initial investment in equipment: $160,000 Estimated annual sales : $150 000 Estimated annual cash expenses related to operations : $1000 The equipment needed for the project has a 4-year useful life with S0 salvage value The working capital will be released at the end of the project The company has a 30% tax rate A 17% discount rate is to be used to evaluate the project a] What is the project's net present value (NPVP b] What is the project's profitability index (assume that working capital needs are part of the i c) Should the company accept the project? Why or why not? l investment required)? (Round to 3 decimal places XX XXX)
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