Problem:

Lakeside Grapes is considering expanding its wine-making operations. They would need new equipment that costs $310 thousand that would be depreciated on a straight-line basis to a zero balance over the 5-year life of the project. The estimated pre-tax salvage value is $60 thousand. The project requires $36 thousand initially for net working capital, all of which will be recouped at the end of the project. The projected operating cash flow is $153 thousand a year.

Requirement:

Question: What is the net present value of this project if the relevant discount rate is 17.9 percent and the tax rate is 33 percent?

Note: Explain all steps comprehensively.