Question

Oego is looking at an assignment that will last 2 years. This assignment would need a startup investment of 174,000 for tools. The tools would then be sold for 62,000 when the project ends 2 years later. The tools would be depreciated to 0 over 3 years using straight-line depreciation. In years 1 and 2, relevant annual revenue for the project is going to be 240,000 per year and relevant annual costs for the project are going to be 110,000 per year. The tax rate is 25 percent and cost of capital is 21.3 percent. what is the net present value?

Answer 1