8- Temple Corp. is considering a new project whose data are
shown below. The equipment that would be used has a 3-year tax
life, would be depreciated by the straight-line method over its
3-year life, and would have a zero salvage value. No change in net
operating working capital would be required. Revenues and other
operating costs are expected to be constant over the project's
3-year life. What is the project's NPV? Do not round the
intermediate calculations and round the final answer to the nearest
whole number.
Risk-adjusted WACC |
10.0% |
Net investment cost (depreciable basis) |
$65,000 |
Straight-line depr. rate |
33.3333% |
Sales revenues, each year |
$71,000 |
Annual operating costs (excl. depr.) |
$25,000 |
Tax rate |
35.0% |