In: Finance
PERIOD
0 1 2 3 4
EBIT $46,000 $57,000 $70,000 $80,000
The above table illustrates earnings before interest and taxes for a capital investment project. Additional information for this project:
initial cost of the investment = $600,000
no change in net working capital
tax rate = 32.0% depreciation = accelerated using the MACRS factors: 0.33330, 0.44450, 0.1481, 0.0741
projected cash flow from salvage = $0
projected erosion costs = $30,000 in Year 1 and $40,000 in Year 2 If the opportunity cost of capital is 11.2%, what is the net present value of this project?