A project requires an initial investment in equipment of $100,000. The project is expected to produce sales revenues of $120,000 for three years. Manufacturing costs are estimated to be 60% of the revenues. The assets are depreciated using straight-line depreciation. At the end of the project, the firm can sell the equipment for $10,000. The corporate tax rate is 30% and the cost of capital is 15%. What would the NPV if the discount rate were higher by 10% (10% of 15% which is 1.5%. So it makes 16.5% in total)?
Get Answers For Free
Most questions answered within 1 hours.