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Swannee Resorts is considering a new project whose...

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Swannee Resorts 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 the project's 3 year life, and would have zero salvage value. No new 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? (Hint: Cash flows are constant in Years 1-3.) WACC 10% Net investment cost (depreciable basis) $65,000 Straight line depr?n rate 33.33% Sales revenues $70,000 Operating costs excl. depr?n $25,000 Tax rate 35%

 

Paper#10042 | Written in 18-Jul-2015

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