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Temple Corp. is considering a new project whose data are shown below. The equipment that would...

Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No change in net operating working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV? Do not round the intermediate calculations and round the final answer to the nearest whole number.

​

Risk-adjusted WACC

10.0%
Net investment cost (depreciable basis)

$65,000
Straight-line depr. rate

33.3333%
Sales revenues, each year

$71,500
Annual operating costs (excl. depr.)

$25,000
Tax rate

35.0%

​

a.

$25,831
b.

$33,377
c.

$22,928
d.

$29,023
e.

$34,828

Solutions

Expert Solution

Solution :

The NPV of the Project = $ 29,023

Thus the solution is Option d = $ 29,023

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

jeff jeffy answered 1 year ago
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