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The corporation is considering the purchase of a new machine. The machine costs $31,500, the project will require the immediate purchase of $100 in inventory, and increase in accounts receivable of $200. The project will produce an after-tax cash flow [=ebit(1-t)+dep] of $5481 per year at the end of each of the next 9 years. The sale of the machine will generate an additional cashflow after tax of $2000 at year 9. Furthermore, assume that at the end of the ninth year the changes in working capital are reversed. If the discount rate is 12%, what is the net present value ( NPV) of this project?

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Financial Management, Finance

Category:- Financial Management
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