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Timbukt Co. plans to carry out a 3-year operative expansion project. It requires an initial investment of USD1,800,000. Assets will be depreciated according to straight
Timbukt Co. plans to carry out a 3-year operative expansion project. It requires an initial investment of USD1,800,000. Assets will be depreciated according to straight line method and has no rescue value at the end. Forecasts consider annual sales of USD$ 1,200,000 with total annual costs of USD $485,000. Corporate tax rate is 30% and required rate of return is 10%. a) Calculate Project's NPV and recommend if it worth to invest or not. b) Calculate IRR and compare verisus required rate.
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