A 5-yr project has an initial requirement of $114,625 for new equipment and $9,960 for net...

A 5-yr project has an initial requirement of $114,625 for new equipment and $9,960 for net working capital. The fixed assets will be depreciated to a zero book value over 5 years and have an estimated salvage value of $24,773. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $58,012. The cost of capital is 9% and the tax rate is 32%. What is the net present value of the project?

Expert Solution

Solution :

The Net Present Value of the project is = $ 74,810.89

= $ 74,811 ( when rounded off to the nearest whole number )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 8 months ago

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