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Temple Corp. is considering a latest project whose data are describe below. The equipment which would be employed 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 new working capital would be required. Revenues and other operating costs are predicted to be constant over the project's 3-year life. Describe the project's NPV?

Risk-adjusted WACC 10.0%

Net investment cost (depreciable basis) $65,000

Straight-line depreciation rate 33.3333%

Sales revenues, each year $65,500

Operating costs (excl. depreciation), each year $25,000

Tax rate 35.0%

a. $15,740

b. $16,569

c. $17,441

d. $18,359

e. $19,325

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M915799

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