What is the NPV of project A? The project would require an initial
investment in equipment of 48,000 dollars and would last for either
3 years or 4 years (the date when the project ends will not be
known until it happens and that will be when the equipment stops
working in either 3 years from today or 4 years from today). Annual
operating cash flows of 16,320 dollars per year are expected each
year until the project ends in either 3 years or 4 years. In 1
year, the project is expected to have an after-tax terminal value
of 38,726 dollars. The cost of capital for this project is 9.66
percent.