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Temporary Housing Services Incorporated (THSI) is considering a project that involves setting up a temporary housing facility in an area recently damaged by a hurricane. THSI will lease space in this facility to various agencies and groups providing relief services to the area.

THSI estimates that this project will initially cost $5.64 million to setup and will generate $20 million in revenues during its first and only year in operation (paid in one year). Operating expenses are expected to total $12 million during this year and depreciation expense will be another $3 million.

THSI will require no working capital for this investment. THSI's marginal tax rate is 35%.

Assume that THSI's cost of capital is 13.9% p.a.

Compute the NPV of the temporary housing facility to the nearest dollar. (Do not enter a dollar sign, just enter your answer as a whole number, either positive or negative)

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92862994

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