Question
What is the NPV for a project with the following characteristics? Initial investment is $1,700,000 Initial investment is depreciated to $0 over its 10 year
What is the NPV for a project with the following characteristics? Initial investment is $1,700,000 Initial investment is depreciated to $0 over its 10 year life Project generates incremental after-tax cash flows (OCF) of $325,000 per year over the projects life Project requires a net working capital (NWC) investment today of $40,000, which is recovered at the end of the project Assets purchased with the initial investment are expected to have a salvage value of $62,000 at the end of the project The firm faces a 28% tax rate The firm requires an effective annual return of 12% on this investment
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