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A project has an initial requirement of $206,204 for new equipment and $8,111 for net working...
A project has an initial requirement of $206,204 for new equipment and $8,111 for net working capital. The installation costs are expected to be $10,540. The fixed assets will be depreciated to a zero book value over the 4-year life of the project and have an estimated salvage value of $110,343. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $70,468 and the cost of capital is 11% What is the project's NPV if the tax rate is 37%? Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
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Expert Solution
| NPV | $44,903.51 |
| Year | Initial cost | NWC | Salvage | Operating cost | Net Cash flow |
| 0 | ($216,744.00) | ($8,111.00) | ($224,855.00) | ||
| 1 | 70468 | $70,468.00 | |||
| 2 | 70468 | $70,468.00 | |||
| 3 | 70468 | $70,468.00 | |||
| 4 | 8111.00 | 69516.09 | 70468 | $148,095.09 |
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